ECON 208 Lecture Notes - Lecture 5: Time Series, Scatter Plot, Invisible Hand

• School: McGill University
• Department: Economics
• Course: ECON 208
• Professor: Paul Dickinson

Document Summary

Negative correlation: x and y move in opposite directions. These compare changed relative to some base period. Value of index in given period = absolute value in given period x 100 absolute value in base period. Value = 100 in base period (select a year) Doing this for one variable over time (time series) is quite simple. Ex: index of prices for a single item (widgets) Price of widgets (pw) rises from in jan. 2010 to in jan. 2011 to in. Value of pw index in 2010 = 50/50 x 100 = 100. Value of pw index in 2011 = 60/50 x 100 = 120 (20% increase in "10) Value of pw index in 2012 = 70/50 x 100 = 140 (16. 67% increase in "11) Why is it 16. 67%? (140-120)/120 = 20/120 = 16. 67. More complex combine more than one variable in a single index- e. g. : cpi an index of inflation or cost of living .