Making and Using Graphs

Graphing data Relationships Slope

Graphing Data

Graphs are a picture of a relationship that exists between variables

The X axis is the horizontal axis The Y axis is the vertical axis A coordinate on a graph gives us

information about the value of X and Y

Graphing Data

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

A positive or direct relationship is said to exist when variables move in the same direction

A negative or inverse relationship is said to exist when variables move in the opposite direction

Variables are independent (unrelated) if one variable remains constant when the other changes

Slope

Slope focuses on change– It tells us how much the x variable changes

when the y variable changes If the slope is a positive number, there

is a positive relation between X & Y If the slope is negative, there is a

negative relation between X & Y

Slope

For a straight line, the slope is calculated as y/x

For a nonlinear function, the slope is approximated by calculating the slope of a tangent