5.0-8.0 Flashcards
It means Economic Measurement
Econometrics
Measuring and analyzing any economic phenomenon using some statistical or mathematical technique
Econometrics
It is used to
*Estimate the magnitude of quantitative relationships among economic variables
*Test economic Hypotheses
*Forecast future outcomes
Econometrics
It was used for 3 reasons
*Estimate the magnitude of quantitative relationships among economic variables
*Test economic Hypotheses
*Forecast future outcomes
What are the 2 components of Econometrics?
Theoretical & Applied Econometrics
Their primary function is to test whether the already existing procedures and statistical tests are sufficient to bring and/or predict any possible economic unknowns.
Theoretical Econometrics
It relies heavily on mathematics, theoretical statistics, and numerical methods to prove that the new procedures have the ability to draw correct inferences.
Theoretical Econometrics
Use econometric techniques developed by the theorists to translate qualitative economic statements into quantitative ones.
Applied Econometrics
A simplified description of reality, designed to yield hypotheses about economic behavior that can be tested.
Economic Model
It is necessarily subjective in design because there are no objective measures of economic outcomes.
Economic Model
Constructed from economic data with the aid of the techniques of statistical inference
Econometric Model
These models are usually based on economic theories that assume optimizing behavior on the part of economic agents.
Econometric Model
It used Economic data.
Econometric Models
Refer to observations of many different individuals (subjects, objects) at a given time, each observation belonging to a different individual.
Ex: The Gross Domestic Product of a country
Cross-Sectional Data
It is a collection of observation (behavior) for a single subject (entity) at different time intervals
Time Series data
Data over different years but from different cross sections.
Ex: house prices in two periods but not the same houses are sold
Pooled Cross Sections Data
Data from many units, over many points in time.
Ex: employment across individuals over time
Panel Data
What are the 4 types of Economic Data
Cross Sectional Data
Time Series Data
Pooled Cross Sections Data
Panel Data
Relationships in Econometrics
- Causation
- Correlation
It indicates that one event is the result of the occurrence of the other event
Causation Relationship
is a statistical measure that indicates how two or more variables move together
Correlation Relationship
Describes the size and direction of a relationship between two or more variables.
Correlation Relationship
This is also referred to as cause and effect
Causation Relationship
It is the starting point of econometric analysis
Linear Regression
It has a dependent variable that is a continuous variable, while the independent variables can take any form (continuous, discrete, or indicator variables).
Linear regression
The 2 classifications of Linear Regression
- Simple linear regression
- Multiple Linear Regression
is seen to slope higher because providers are prepared to create more when prices rise .
Supply
is thought to slope downward since customers tend to buy less when prices are greater.
Demand
It displays the amounts of a certain commodity or service that consumers will be able and willing to buy at each price throughout a given time frame.
Demand curve
It displays the volume of goods that merchants will put up for sale at each price during that time.
Supply Curve
outlines the quantity of goods a provider is prepared and ready to give the market at particular price points over a specific time frame.
Supply slope
shows exactly how many units of a good or service will be purchased at various price points.
Demand Slope
Is the quantity of a commodity that people are willing to buy at a particular price at a particular point of time.
Quantity Demanded
refers to a specific point on that curve, where a certain price is associated with a certain quantity.
Quantity demanded
defined as the total amount of a good or service that producers and suppliers are willing and able to sell at a given price in a given period of time.
Quantity Supplied
states that as prices rise, customers buy less.
Law of Demand
says that when prices rise, companies see more profit potential and increase the supply of goods and services.
Law of Supply
Occurs at the point where the aggregate demand meets the aggregate supply.
Equilibrium
is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
Gross Domestic Produce
As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health.
Gross Domestic Product
is an assessment of economic production in an economy that includes current prices in its calculation.
Nominal GDP
An inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year.
Real GDP
