Making and Using Graphs n Graphing data n Relationships n Slope

Graphing Data n Graphs are a picture of a relationship that exists between variables n The X axis is the horizontal axis n The Y axis is the vertical axis n A coordinate on a graph gives us information about the value of X and Y

Graphing Data n There are 3 basic types of graphs –A scatter diagram plots the value of one economic variable against the value of another –We use this graph to determine if a relationship exists between two variables

Graphing Data –A time-series graph measures time on the X axis and a variable in which we are interested on the Y axis. –A time-series graph can show us 1) when a variable is high or low, 2) how a variable changes over time, 3) the rate at which a variable changes over time, and 4) any trend (tendency to rise or fall) in a variable

Graphing Data –A cross-section graph shows the values of an economic variable for different groups in a population at a point in time –We can use these diagrams to make comparisons across cross-sectional units

Relationships n A positive or direct relationship is said to exist when variables move in the same direction n A negative or inverse relationship is said to exist when variables move in the opposite direction n Variables are independent (unrelated) if one variable remains constant when the other changes

Slope n Slope focuses on change –It tells us how much the x variable changes when the y variable changes n If the slope is a positive number, there is a positive relation between X & Y n If the slope is negative, there is a negative relation between X & Y

Slope n For a straight line, the slope is calculated as  y/  x n For a nonlinear function, the slope is approximated by calculating the slope of a tangent