Economic Thinking
The nature of the relationships between variables can be expressed by way of
1) Graphs 2) Analyzing data 3) Mathematical equations (Partially correct)
When certain assumptions are used to create a model of reality, its value can be tested and determined by
Not Graphing equations (Pick another answer)
When an economist or a mathematician uses equations to calculate changing economic conditions, they use variables to simplify this process. What is the variable?
The name given to a quantity that can assume a range of values
In the case of an inverse relationship between two variables, all else remaining constant
The value of the two variables will move in opposite directions from each other
Given that spending for a certain household will always include a base amount of $1000/month, and that additional spending is equal to half of any income earned, we can predict household spending with a model y=b+mx, where
x represents income earned
Scarcity is a condition that is everywhere and always, since it is based upon two assumptions that reflect permanent universal conditions. The assumptions are that
1) More input satisfies more wants 2) The world has limited productive resources
The advantages that society gains through trade lie in the ability to
1) Refine tasks associated with production 2) Attain absolute advantage in our trade with other nations (Partially correct)
In the case of a positive relationship between two variables, all else remaining constant
1) The values of the two variables will move in the same direction 2) Graphically, the data line representing the the relationship between the variables has a positive slope
