ECON 201 Lecture 2: Chapter 2 Summary

• School: Concordia University
• Department: Economics
• Course: ECON 201
• Professor: Mehrab Kiarsi

Document Summary

What do economists do: economic theories, hypotheses and models, ceteris paribus. Forms of data: cross sectional, time series, longitudinal. Price indexes: single price index, composite index. Observe and study economic behaviour, experience and events. Example: what is the effect of interest rates on house prices. Use economic theories that can explain economic behaviour. The theory says: interest rates determine the cost of buying a house. Make a hypothesis: changes in interest rates cause changes in house prices. Use economic models to test hypotheses, explain economic behaviour and predict policy outcomes. To do this, some tools and techniques are needed, such as: data: actual recorded values of variables. Variables here are house prices and interest rates. Collect house price and interest rate data: algebra. Construct a model in a mathematical form: diagrams: observe the data. Increasing house prices and falling interest rates at the same time e c i r.