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Micro Economics > Chapter 2- Theories, Data And Beliefs > Flashcards

Chapter 2- Theories, Data And Beliefs Flashcards

1
Q

Variables

A

Measures that can take on different values

Ex:

  • wages
  • labour
  • GDP
  • inflation
  • etc
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2
Q

Data

A

Recorded values of variables

Can take many forms

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3
Q

What do economic models and theories explain?

A

The causal relationships between variables

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4
Q

What do sets if data do?

A

Help us test our models and theories

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5
Q

Time-series

A

Reflects a set of measurements made in sequence at different points in time.

  • Can predict future values looking at past values
  • Can see progression over time
  • time is the independent variable
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6
Q

High frequency data vs low frequency data?

A

High frequency data is more for a type of data that you look at minute by minute (like stock brokers) while low frequency is more of annual data type

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7
Q

Cross-section data

A

Recorded values of different variables at a point in time

  • many individuals can be involved
  • no regard to differences in time
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8
Q

Repeated cross section data

A

Cross section data recorded at regular or irregular intervals

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9
Q

Longitudinal data

A

Follow the same units of measure through time

- it is the same sample of population

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10
Q

Longitudinal vs time-series

A

Longitudinal: overall changes
vs
Time-series: individual changes

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11
Q

Index number

A

Measure of change in a variable or group of variables over a period of time

  • gives clear representation if the change (sometimes, normal numbers aint clear enough)
  • measure trends in different areas since any variable can be analysed
  • facilitate percentage interpretation of data
  • does not depend on units of measure

(Value of t) / (value of base) x 100

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12
Q

Percentage change

A

To make comparisons between two markets

(Change in value) / (original value) x 100

Usually does not get into account deflation

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13
Q

Composite index numbers

A

We want to define price index on a group

  • makes some worth more than others
  • items that weight more will be worth more in calculation
  • We end up using consumer price index
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14
Q

Consumer Price Index (CPI)

A

Measures cost of living

Reflects prices of consumer goods and services as well as the changes

(Cost of product in year t) / (cost of product in base year) x 100

Defines annual inflation and deflation

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15
Q

Inflation

A

Decrease in the value of money

Increase in annual percentage of CPI

Has an eroding power

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16
Q

Deflation

A

Annual decrease of CPI percentage

17
Q

Real price change

A

Price change percentage taking into account inflation or deflation

18
Q

What does graphing permit us to possibly do?

A

Predict certain outcomes since you look at the relationships between variables

19
Q

What is A hypothesis regarding graphs

A

It is a theory we try to test by looking at possible relationships between variables.

We look at what causes what.

20
Q

Regression line

A

Shows average relationship between economic variables

21
Q

Econometrics

A

Used to quantify relationships between variables

22
Q

Why do we construct models

A

To test hypothesis and test data

23
Q

What does a graph allow us to do

A

We can make the combinations of variables in play, hence allowing us to look at relationships

24
Q

Simple model

A

Nothing influences the relationships in play, it is non realistic

25
Q

Broader model

A

It is more realistic since external factors influence both variables in play, hence the relationship as well

26
Q

Straight line diagrams vs curved line diagrams

A

Simplification of economic relationships

Vs

Better illustration of economic relationships

27
Q

Positive economics

A

Looking at facts and data based on scientific observation

Its very objective

Scientific explanations of how economy functions

28
Q

Normative economics

A

Based on norms, values and beliefs

Implies some sort of judgement that leads to recommendations

Used a lot by politicians

29
Q

Economic equity

A

Ressources distributed in a way that increases welfare

Relationship between happiness and national income as equal as possible

30
Q

Example from quiz 2: Normative or positive?

1) More MRI machines = less waiting time
2) the high temperature today was 32 degrees
3) college and uni should be cheaper so that most can study
4) unemployment rate higher in Italy than canada
5) it was too hot yesterday in vancouver

A

1) positive
2) positive
3) normative
4) positive
5) normative

31
Q

Real price index calculation

A

(Nominal price index / CPI of respective year) X 100

Micro Economics (13 decks)

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