CH2 - Economic Theories, Data, and Graphs Flashcards
What is a normative statement?
They depend on value judgments and cannot be evaluated solely by a recourse to facts
What is a positive statement?
Statements about matters of fact, and so disagreements about them are appropriately dealt with by an appeal to evidence. They dont necessarily have to be true
What is the difference between an endogenous and an exogenous variable?
endogenous: value is determined within the theory, ie price and quantity of eggs
exogenous: influences the endo variables but is itself determined outside the theory, ie state of the weather
What is an hypothesis?
Propositions that can be deduced from a theory
What is one of economists’ difficulites when it comes to their data to build models and theories?
Economists have easier access to data, but are often less informed abt the limits of their data
What is an index number?
A measure of some variable, conventionally expressed relative to a base period, which is assigned the value 100
Why do we use index numbers in economics?
That way, the focus is on relative rather than absolute change
Give the formula to find an index number
Absolute value in given period / absolute value in base period
What kind of data do you get from cross-sectional data?
a number of different observations on 1 variable all taken in different places at the same point in time
What is times-series data?
Observation of 1 variable at succesive points in time
What is a scatter diagram?
It shows the relations between 2 variables. values of one variable are measured on the horizontal axis and values of the second variable are measured on the vertical axis. It can be either crossectional or timesseries data.
Define ‘theory’
theories are assumptions based on observations
What kind of variable is y and x in the equation y=mx+b ?
x –> exogenous variable, determined outside of the model
y –> endogenous variable, determined within the model
