MACROECONOMICS: EXPLORE & APPLY by Ayers and Collinge Chapter 1 Appendix

Working with Graphs and Data Graphs clarify thoughts and show economic relationships in a way that can be more easily understood that with words alone.

Working with Graphs and Data Graphs that present factual information are often drawn as line graphs, bar charts, and pie charts. Other graphs represent economic models and contain lines that are referred to as curves.

Direct versus Inverse Relationships Y variable Direct Relationship (positive) upward sloping to the right. Inverse Relationship (negative) downward sloping to the right. X Variable

Direct Relationships A Center City 30 inches 100 units B Moose Haven Data Point Community Yearly Rainfall Umbrella Sales A Center City 30 inches 100 units B Moose Haven 40 inches 200 units C Blountville 50 inches 300 units D Houckton 60 inches 400 units E Echo Ridge 70 inches 500 units

Positive Slope Umbrella Sales Slope = 100/10 = 10 Yearly Rainfall 100 C D E 500 Slope = 100/10 = 10 400 100 300 10 200 100 Yearly Rainfall 10 20 30 40 50 60 70 80

Inverse Relationships Data Point City Coat Sales Average January Temperatures F Tropical City 100 units 50 degrees G North Town 200 units 40 degrees H Snowbound 300 units 30 degrees I Cold City 400 units 20 degrees J Arctica 500 units 10 degrees

Negative Slope Sales of woolen coats Slope = -100/10 = -10 January H G F 500 Slope = -100/10 = -10 400 -100 300 10 200 100 January temperatures 10 20 30 40 50 60 70 80

Information at the Margin The slope shown equals –25, which means that the additional spending by restaurant customers decreases by $25 with each passing hour. Incremental Spending -25 1 100 75 50 1 2 3 Hours

A Shift in the Curve Umbrella Sales When a curve changes position, we say there has been a shift in the curve. A shift represents a new relationship between the variables. A B C D E 500 400 300 200 100 Yearly Rainfall 10 20 30 40 50 60 70 80

An Intersection Point A At the intersection point of two curves, their values are identical. Y Curve 1 Curve 1 X

The End! Next Chapter 2 “Production and Trade"