Economic Theories, Data And Graphs Ch2 Flashcards
What is a normative statement?
They are statement that involve value judgment and cannot be disproven…. what ought to be happen, how one would like the world work
Positive Statement?
Statement that can be disproven with an appeal to evidence…..about how the world currently works
What are Theories/ Models
It consist of a set of definitions of the variables to be discussed, a set of assumptions about how the variables behave and the condition under which the theory is applied….. it’s to make complex economic event more less abstract
A theory makes predictions of what type
Of the type “if one event occurs, then another event will also occur”
Who is a theory checked
Theories are checked by their predictions against evidence. Testing is usually always with the data gotten with ordinary world events….. empirical observation
What techniques do economist use to test their theories?
They use statistical analysis. Making sure to distinguish correlation and causation
Why do we use index numbers?
Because using that absolute number is accurate. Using the index number gives you a relative solution
Cross sectional graph?
Shows the observations of different variables at the same time eg. The population on 100 countries in the year 2018
Different variables one time
Time series graph?
Shows the observation of one variable over a time period eg the population changw in Canada since 2000 to 2020
One variable different times
Scatter diagrams?
Shows many point in time of a special observation of two or more variables eg the income and investment rate in 60 countries since year 2003 to 2016
In what ways can functional relations be expressed
- words
- table
- mathematical equation
- graphs
What does it mean for a graph of two varavle to have a negative / positive slope?
If the slope is negative, the two variables are moving in the opposite direction (one increase the other decreases)
If the slope is positive, the two variables are moving in the same direction ( of one increases so will the other)
What is a marginal response of a variable?
The MRV is amount of change it undergoes in response a change in the other variable. Y is usually the variable with a marginal response
How is the marginal response found?
It’s measured by the slope of the line at a particular point
What is the Marginal response at the maximum/ minimum point in a curve
Zero
