Graphs in Economics
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Economic theory identifies important economic variables and attempts to explain their relationships. Economists frequently rely on graphs to illustrate these relationships. They use multiple types of graphs to examine these relationships.
Types of Graphs
1. Circular Flow
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- THIS SHOULD BE REVIEW
- Circular flow of economics: the flow of resources, goods and services, and money in a market system
- The process of economics in the real world.
- Used to show the cause and effect of inputs to outputs in production
- You will never create one of these
2. Scatter graphs
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- Scatter graphs are used to show trends through time.
- This helps to identify economic problems and narrow in on their source
3. Bar graphs/pie charts
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- Used to present economic data
- This usually pertains to percentages
- Used in many businesses and governmental data
4. Graphs
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- Graphs are used to show multiple types of relationships between economic variables.
- Most commonly to show the relationship of supply and demand both separately and together.
- You will only learn HOW to graph a line today. You will learn how to do supply and demand in later lessons. Supply and demand graphs are not always straight lines. We will complicate things a little later :)