worldwide box office revenues for ten popular movies. The figure shows no tendency for a
larger production budget to bring a greater box office revenue.
The scatter diagram in Figure A1.4a shows the relationship between income measured in
thousands of dollars per year, and expenditure measured in thousands of dollars per year, for
the years 2005 to 2015. The scatter diagram shows that higher income leads to higher
expenditure. The figure also shows this is a close relationship.
The scatter diagram in Figure A1.4b shows the relationship between the unemployment rate
and the inflation rate for the years 2006 to 2016. The figure shows that for most of the years,
the relationship between inflation and unemployment is weak.
4. Draw a graph to show the relationship between two variables that move in the
same direction.
A graph that shows the relationship between two variables that move in the same direction is
shown by a line that slopes upward.
5. Draw a graph to show the relationship between two variables that move in
opposite directions.
A graph that shows the relationship between two variables that move in opposite directions is
shown by a line that slopes downward.
6. Draw a graph of two variables whose relationship shows (i) a maximum and (ii)
a minimum.
A graph that shows the relationship between two variables that have a maximum is shown by
a curve that starts out sloping upward, reaches a maximum, and then slopes downward.
A graph that shows the relationship between two variables that have a minimum is shown by
a curve that starts out sloping downward, reaches a minimum, and then slopes upward.
7. Which of the relationships in Questions 4 and 5 is a positive relationship and
which is a negative relationship?
The relationship in Question 4 between the two variables that move in the same direction is a
positive relationship. The relationship in Question 5 between the two variables that move in
opposite directions is a negative relationship.
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10 AP P ENDIX
8. What are the two ways of calculating the slope of a curved line?
To calculate the slope of a curved line we can calculate the slope at a point or across an arc.
The slope of a curved line at a point on the line is defined as the slope of the straight line
tangent to the curved line at that point. The slope of a curved line across an arc—between
two points on the curved line—equals the slope of the straight line between the two points.
9. How do we graph a relationship among more than two variables?
To graph a relationship among more than two variables, hold constant the values of all the
variables except two. Then plot the value of one of the variables against the other variable.
10. Explain what change will bring a movement along a curve.
A movement along a curve occurs when the value of a variable measured on one of the axes
changes while all of the other relevant variables not graphed on the axes do not change.
11. Explain what change will bring a shift of a curve.
A curve shifts when there is a change in the value of a relevant variable that is not graphed on
the axes.
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WH AT IS ECO NO MICS? 1 1
Answers to the Appendix Study Plan Problems and
Applications
Use the spreadsheet to work
Problems 1 to 3. The spreadsheet
provides the economic data: Column
A is the year, column B is the inflation
rate, column C is the interest rate,
column D is the growth rate, and
column E is the unemployment rate.
1. Draw a scatter diagram of the
inflation rate and the interest
rate. Describe the
relationship.
To make a scatter diagram of the inflation rate and the interest rate, plot the inflation rate on
the x-axis and the interest rate on the y-axis. The graph will be a set of dots. The pattern
made by the dots shows a weak positive relationship.
2. Draw a scatter diagram of the growth rate and the unemployment rate. Describe
the relationship.
To make a scatter diagram of the growth rate and the unemployment rate, plot the growth
rate on the x-axis and the unemployment rate on the y-axis. The graph will be a set of dots.
The pattern made by the dots shows that when the growth rate increases, the unemployment
rate usually decreases so there is a negative relationship.
3. Draw a scatter diagram of the interest rate and the unemployment rate. Describe
the relationship.
To make a scatter diagram of the interest rate and the unemployment rate, plot the interest
rate on the x-axis and the unemployment rate on the y-axis. The graph will be a set of dots.