CH2 Economic data

Question 1

What are the 2 reasons why economists collect data?

Answer 1

1) the scientific method requires that theories be tested. Data may be used to refute or support a theory
2) economists are often required to provide support for particular policies. Without economic data it is often difficult, in not impossible, to make policy recommendations.

Question 2

What is one problem with using money as a measure for the value of an item?

Answer 2

it is that inflation erodes the purchasing power of money

Question 3

What are nominal values?

Answer 3

values which are unadjusted for inflation. These values are expressed at current prices

Question 4

What are real values?

Answer 4

values/data which are adjusted for inflation.

Question 5

What is involved in adjusting values/data for inflation?

Answer 5

involves taking one period of time as the base period. Data are then adjusted assuming that prices were the same throughout as in the base period

Question 6

What are indices used for?

Answer 6

they are used to simplify statistics and to express averages