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Lecture Macroeconomics (20/e): Chapter 1A - McConnell, Brue, Flynn
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Lecture Macroeconomics (20/e): Chapter 1A - McConnell, Brue, Flynn
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Chapter 1A - Graphs and their meaning. This appendix helps in understanding graphs, curves, and slopes as they relate to economics. It demonstrates how relationships between variables can be examined and how an equation that expresses that relationship can be derived. | Chapter 1A Graphs and Their Meaning Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. This appendix helps in understanding graphs, curves, and slopes as they relate to economics. It demonstrates how relationships between variables can be examined and how an equation that expresses that relationship can be derived. Construction of a Graph Graph A visual representation of the relationship between two variables Horizontal axis Vertical axis Independent variable Dependent variable Ceteris paribus LO8 The two dimensional graphs used in this textbook consist of a horizontal axis and a vertical axis. The point where the two meet is called the origin. As one moves away from the origin either up or to the right, the plotted values increase. Often the independent variable which is the variable that changes first, is placed on the horizontal axis and the dependent variable which is the . | Chapter 1A Graphs and Their Meaning Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. This appendix helps in understanding graphs, curves, and slopes as they relate to economics. It demonstrates how relationships between variables can be examined and how an equation that expresses that relationship can be derived. Construction of a Graph Graph A visual representation of the relationship between two variables Horizontal axis Vertical axis Independent variable Dependent variable Ceteris paribus LO8 The two dimensional graphs used in this textbook consist of a horizontal axis and a vertical axis. The point where the two meet is called the origin. As one moves away from the origin either up or to the right, the plotted values increase. Often the independent variable which is the variable that changes first, is placed on the horizontal axis and the dependent variable which is the variable that changes in response to the first variable changing, is placed on the vertical axis. However, in economics it is customary to always place price or cost data on the vertical axis even if it is the independent variable. Economist invoke the ceteris paribus assumption in economics in order to be able to analyze just the two variables that are labeled on the axis. Ceteris paribus means to hold other things equal or constant and assumes that the only changes in the model are brought about by the dependent variable changing in response to the change in the independent variable. Direct and Inverse Relationships Direct relationship Both variables move in the same direction LO8 Direct or positive relationships occur as the two variables change in the same direction. In other words, when the independent variable increases (decreases), the dependent variable also increases (decreases). This graphs as an upsloping line. Direct and Inverse Relationships Inverse relationship .
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