ECO182 - Lecture 1

ECO182 - Lecture 1 - A time series graph shows how a TIME...

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1 of 36 Appendix A time series graph shows how a single variable changes over time. TIME SERIES GRAPH FIGURE 1A.1 Total Disposable Personal Income in the United States: 1975–2005 (in billions of dollars)
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2 of 36 The slope of the line indicates whether the relationship between the variables is positive or negative. The slope of the line is computed as follows: Y X Y Y X X = - - 2 1 2 1
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3 of 36 PLOTTING INCOME AND CONSUMPTION DATA FOR HOUSEHOLDS Appendix TABLE 1A.1 Total Disposable Personal Income in the United States, 1975–2005 (in billions of dollars) YEAR TOTAL DISPOSABLE PERSONAL INCOME YEAR TOTAL DISPOSABLE PERSONAL INCOME 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1,181.4 1,299.9 1,436.0 1,614.8 1,808.2 2,019.8 2,247.9 2,406.8 2,586.0 2,887.6 3,086.5 3,262.5 3,459.5 3,752.4 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 4,016.3 4,293.6 4,474.8 4,754.6 4,935.3 5,165.4 5,422.6 5,677.7 5,968.2 6,355.6 6,627.4 7,120.2 7,393.2 7,827.7 8,159.9 8,646.9 8,945.6
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From 2000 to 2001, aggregate personal disposable income increased from $ 7120.2 billion to $ 7393.2 billion CHANGE IN Y = $ 7393.2 - $ 7120.2 = $ 273.0 billion CHANGE IN X = 1 year SLOPE = $ 273.0 billion/year From 2004 to 2005, aggregate personal disposable income increased from $ 8945.6 billion to $ 8646.9 billion CHANGE IN Y = $ 8945.6 - $ 8646.9 = $ 298.7 billion CHANGE IN X = 1 year SLOPE = $ 298.7 billion/year
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5 of 36 Appendix This line slopes upward, indicating that there seems to be a positive relationship between income and spending. Points A and B , above the 45° line, show that consumption can be greater than income. TABLE 1A.2 Consumption Expenditures and Income, 2003 AVERAGE INCOME BEFORE TAXES AVERAGE CONSUMPTION EXPENDITURES Bottom fifth 2nd fifth 3rd fifth 4th fifth Top fifth $ 8,201 21,478 37,542 61,132 127,146 $ 18,492 26,729 36,213 50,468 81,731 SLOPE FROM A TO B = 8,000/12,000 =2/3 SLOPE OF 45 DEGREE LINE = 1
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ECO182 - Lecture 1 - A time series graph shows how a TIME...

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