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Intro to Macro; Chapter 2 App.
Graphs in economics
21
Economics
Undergraduate 2
02/02/2008

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Term
variable
Definition
a quantity that can take on more than one value
Term
causal relationship
Definition
exists between two variables when the value taken by one variable directly influences or determines the value taken by the other variable. 
Term
linear relationship
Definition
if the curve is a straight line, the variables have a linear relationship
Term
nonlinear relationship
Definition
if the curve is not a straight line, the variables have a nonlinear relationship
Term
positive relationship
Definition
when an increase in the value of one variable is associated with an increase in the value of the other variable.  It's illustrated by a cure that slopes upward from left to right
Term
negative relationship
Definition
when an increase in the alue of one variable is associated with a decrease in the value of the other variable.  It's illustrated by a curve that slopes downward from left to right.
Term
horizontal intercept
Definition
the horizontal intercept of a curve is the point at which it hits the horizontal axis; it indicates the value of the x-variable when the alue of the y-variable is zero
Term
vertical intercept
Definition
the point at which the curve hits the vertical axis; it shows the value of the y-variable when the value of the x-variable is zero
Term
slope
Definition
the slope of a line or curve is a measure of how steep it is.  The slope of a line is measured by "rise over run"- the change in the y-variable between two points on the line divided by the change in the x-variable between those same two points
Term
nonlinear curve
Definition
is one in which the slope is not the same between every pair of points
Term
absolute value
Definition
the value of a negative number without the minus sign
Term
tangent line
Definition
a straight line that just touches, or is tangent to, a nonlinear curve at a particular point.  The slope of the tangent line is equal to the slope of the nonlinear curve at that point
Term
maximum
Definition
a nonlinear curve may have a maximum point, the highest point along the curve.  At the maximum, the slope of the curve changes from positive to negative.
Term
minimum
Definition
a nonlinear curve may have a minimum point, the lowest point along the curve.  At the minimum, the slope of the curve changes from negative to positive.
Term
time-series graph
Definition
has dates on the horizontal axis and values of a variable that occured on those dates on the vertical axis
Term
scatter diagram
Definition
shows points that correspond to actual observations of the x- and y-variables.  A cure is usually fitted to the scatter of points
Term
pie chart
Definition
shows how some total is diided among its components, usually expressed in percentages
Term
bar graph
Definition
uses bars of varying height or length to show the comparative sizes of different observations of a variable
Term
truncated
Definition
an axis is truncated when some of the values on the axis are omitted, usually to save space
Term
omitted variable
Definition
an unobserved variable that, through its influence on other variables, creates the erroneous appearance of a direct causal relationship among those variables
Term
reverse causality
Definition
an error committed when the true direction of causality between two variables is reversed
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