BUS 207 Study Guide - Final Guide: Exogeny, Equation, Scatter Plot
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Question 1: models (or theories, endogenous; exogenous, (conditional) prediction; empirical, (positively) correlated; causal, self-interest; utility; profits. Question 2: index; relative, absolute value of the price; absolute value of the price, cross-section, scatter, time-series. Question 3: y/ x, 500; positively; 4, 12; negatively; -0. 2, tangent, zero; zero. The observed correlation cannot lead to a certain inference about causality. It is consistent with the theory that the increase in demand for homes leads to an increase in the price of lumber (which is generally a pretty sensible theory! ), but it is also consistent with a different theory one in which some unobserved factor leads to both the increase in demand for homes and separately to the increase in the price of lumber. Question 7: using 2009 as the base year means that we choose as the base price. We thus divide the actual prices in all years by and then multiply by 100.