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Understanding Indexes And Variables For Your Economics Homework

In order to successfully complete you economics homework you need to have total understanding of variables and indexes. So what exactly are they? Basically they are the building blocks of the information that you need to understand how growth, strength and weakness has an effect on the economy.

  • Variables - essentially these are the factors that can cause changes. These changes are determined to be either:
  • Independent - that means that the researcher or economist has control over this variable and can examine what happens when they change the variable in any way, or they can make predictions as to the outcome of any change. For example in economics if you change (hypothetically ) the interest rate, what effect will it have on the economy?
  • Dependent - is the changes that occur when the Independent variable is changed in any way. (Independent Variable is the cause and Dependent Variable is the effect). So, the interest rate has increased what effect does it have on the economy in general?, what effect does it have on house buying? What effect does it have on trade?
  • Controlled - these are the quantities or factors that must remain constant because if these change in any way it negates the results of the hypotheses (if A & B remain constant or rather controlled and we change C , which is the Independent Variable then does D occur or E?)

It should be also noted that a variable needs to be a quantifiable element and have the ability to be measured through statistical analysis and the response to any change should be viable.