Models and Theories

O Like scientists, economists and economic analysts observe the world and construct theories
about why things happen or whether speciIic relationships exist. AIter an economist
constructs a theory, he tries to Iind inIormation that supports or disproves his theory.
Although an economist can never prove her theory deIinitively, her theory becomes more
persuasive as she Iinds more evidence to support it..
raphs
O Creating a graph is a great way Ior economic analysts to show a relationship between two
variables. For example, an economist who wants to analyze unemployment statistics over 50
years can create a graph with the year (e.g. 2000, 2001) on the x-axis and the rate oI
unemployment on the y-axis.

Read more: Tools Ior Economic Analysis , eHow.com
http://www.ehow.com/Iacts¸6908095¸tools-economic-analysis.html#ixzz0yjj8sDYu

Mathematical Analysis
O Most modern-day economic analysis involves a lot oI mathematical calculation. One
popular mathematical calculation is linear regression analysis (LRA). LRA allows economists
to determine the extent to which one variable aIIects the others. For example, iI you want to
know how much the weather aIIects attendance at baseball games and the happiness oI the
Ians at the game, you can run a LRA. Such analysis is complicated, but rigorous study oI
mathematics makes it a lot easier.

Read more: Tools Ior Economic Analysis , eHow.com
http://www.ehow.com/Iacts¸6908095¸tools-economic-analysis.html#ixzz0yjjHn5cp

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