Tools of Economic Analysis

Question	Answer
What is a behavioural law?	A sensible theoretical relationship not rejected by evidence over a long period.
What is time series data?	A sequence of measurements of the same variable at different points in time.
What is cross-section data?	A record at a point in time the way an economic variable differs across different individuals or groups of individuals.
What is panel data?	A record of observations over multiple time periods for the same individuals or group of individuals.
What is an index number?	An index number expresses data relative to a given base value.
Formula for index price	(Chosen year/Base year) x 100 Example: iPhones were $599 in the base year of 2007. 599/599 x 100 = index 100 In 2015, the newest iPhone is $199. 199/599 x 100 = index 33.22
Define 'Consumer Price Index'	The CPI measures changes in the cost of living by looking at the cost of a standard 'shopping basket' of goods.
Define 'Inflation Rate'	The annual rate of change of the consumer price index.
What's the difference between nominal and real values?	Nominal values are measured in the prices ruling at the time of measurement. Real values adjust nominal values for changes in the price level.
Define 'The Purchasing Power of Money'	An index of the quantity of goods that can be bought for £1.

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	Created by BryanTurner about 9 years ago