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January 17, 2022 

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TAX RATE: The percent of the tax base that is collected as tax. The tax rate can be a flat, or proportional, rate, meaning it is a constant percent of the tax base regardless of the size or value of the base. Or the tax rate can change as the tax base changes. If the tax rate increases, the tax is progressive. If the tax rate decreases, the tax is regressive.

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GRAPHICAL ANALYSIS:

The process of investigating phenomena, especially economic phenomena, in a systematic manner using diagrams and graphs. Graphical analysis is commonly used to display abstract scientific relations, then to manipulate those relations to gain greater understanding of real world events. The market model is a primary example of graphical analysis.
Graphs are two-dimensional pictures used to represent economic relations between two (or more) variables. Graphical analysis is most interesting and useful when it combines two or more relations into a single diagram. The interaction among these relations is then analyzed for insight into the workings of the economic world.

A Primer On Graphs

InSc24


Consider three common types of graphs:
  • Pie Chart: A graph commonly used to present the division of a total among parts is a pie chart. Click the [Pie Chart] button to illustrate. This particular pie chart represents the division of national income among different factor payments--wages, interest, rent, and profit. The pie is the total and each slice represents the portion distributed to each category. Pie charts are a handy way to present information, but are not well suited for more involved economic analysis.

  • Bar Chart: A graph used to present data for discrete categories is a bar chart. Click the [Bar Chart] button to illustrate. This bar chart indicates the unemployment rate for each of five demographic groups--total population, males, females, whites, and non-whites. A bar chart provides a useful way to compare information about different groups or categories.

  • Line Graph: A graph that tends to be most useful in the construction of graphical models and in doing economic analysis is a line graph. Click the [Line Graph] button to illustrate. This particular line graph shows the relation between two variables--price and quantity. Such line graphs are ideally suited for illustrating scientific principles and hypotheses. They can be used to show how one variable (quantity) is affected by changes in another variable (price).

Two Relations

Two alternative relations are commonly illustrated with line graphs.
  • Positive or Direct: One type of line graph illustrated by clicking the [Positive Relation] button represents a positive or direct relation between two variables, such as price and quantity. With this line, a higher price is related to a larger quantity. Another way of stating this is that the slope of the line is positive. A common positive relation in economics is the market supply curve.

  • Negative or Indirect: A second type of line, one that represents a negative or indirect relation between two variables, such as price and quantity, can be seen by clicking the [Negative Relation] button. With this line, a lower price is related to a larger quantity. Another way of stating this is that the slope of the line is negative. A common negative relation in economics is the market demand curve.

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Recommended Citation:

GRAPHICAL ANALYSIS, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: January 17, 2022].


Check Out These Related Terms...

     | economic analysis | marginal analysis | ceteris paribus | comparative statics | variables |


Or For A Little Background...

     | scientific method | abstraction | variable | model | cause and effect | empirical | principle | hypothesis |


And For Further Study...

     | science | economic thinking | economic science | seven economic rules | fallacies | positive economics | production possibilities | derivation, production possibilities curve | market adjustment | demand shock | supply shock | circular flow |


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