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Chapter 12: Problem 59

The Gross Domestic Product Purchasing Power Parity is an indication of a country鈥檚 currency value compared to another country. Table 12.16 shows the GDP PPP of Cuba as compared to US dollars. Construct a scatter plot of the data. $$\begin{array}{|c|c|}\hline \text { Year } & {\text { Cuba's PPP }} & {\text { Year }} & {\text { Cuba's PPP }} \\ \hline 1999 & {1,700} & {2006} & {4,000} \\ \hline 2000 & {1,700} & {2007} & {11,000} \\ \hline 2002 & {2,300} & {2008} & {9,500} \\ \hline 2003 & {2,900} & {2009} & {9,900} \\\ \hline 2004 & {3,000} & {2010} & {9,900} \\ \hline 2005 & {3,500} & {} \\\ \hline\end{array}$$ Table 12.16

Short Answer

Expert verified
Plot the coordinates (Year, GDP PPP) on the graph.

Step by step solution

01

Understand the Data Structure

The table provides the GDP PPP (Purchasing Power Parity) values of Cuba compared to US dollars over different years. The data is organized in two columns: one for the year and one for the PPP value for that year. This indicates that for each pair listed, the first element represents the year, and the second represents the GDP PPP value for that year.
02

Extract Data Points

We will extract the data points from the table: (1999, 1700), (2000, 1700), (2002, 2300), (2003, 2900), (2004, 3000), (2005, 3500), (2006, 4000), (2007, 11000), (2008, 9500), (2009, 9900), (2010, 9900). Each data point is a combination of a year and the corresponding Cuba's GDP PPP value for that year.
03

Choose Axes for the Scatter Plot

In a scatter plot, we typically represent each observation as a point in a two-dimensional space. Here, the horizontal axis (x-axis) will represent the year, and the vertical axis (y-axis) will represent Cuba's GDP PPP value.
04

Plot the Data Points

For each pair extracted, plot a point on a graph where the x-coordinate corresponds to the year and the y-coordinate corresponds to the GDP PPP value. For example, plot a point at (1999, 1700), another at (2000, 1700), and so on until all points are plotted.
05

Label and Style the Scatter Plot

Ensure the scatter plot is properly labeled. This includes adding titles such as 'GDP PPP of Cuba Over Time', labeling the axes ('Year' on the x-axis and 'GDP PPP (USD)' on the y-axis), and ensuring points are visible. Use units, if necessary, for clarity, and consider different colors or markers for each year if it helps in distinguishing the points.

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Gross Domestic Product (GDP)
The Gross Domestic Product, commonly referred to as GDP, is a measure that totals the value of all goods and services produced in a country within a specific period, usually a year. This metric is widely used to gauge a country's economic performance. Understanding GDP helps in:
  • Assessing the economic health of a country.
  • Comparing economic productivity between different periods.
  • Assisting policymakers in making informed decisions regarding fiscal and monetary policies.
GDP can be reported in dollars or adjusted for inflation to provide a "real" comparison over time. This is valuable for tracking genuine growth, free from the influence of fluctuating currency values or different price levels that year.
When examining GDP, it's crucial to differentiate nominal GDP from real GDP. Real GDP accounts for inflation, providing a more accurate economic analysis.
Purchasing Power Parity (PPP)
Purchasing Power Parity, or PPP, is an economic theory that allows the comparison of the purchasing power of various countries' currencies through the cost of a standard goods basket, even when exchanged currencies are different. The concept is designed to:
  • Compare living standards between countries by adjusting for price level differences.
  • Provide a basis for international economic and financial comparisons.
  • Enable a more accurate measurement of economic productivity and income levels.
PPP is vital because it accounts for the distinctive cost of living and inflation rates, offering a more realistic comparison of economic well-being than nominal exchange rates.
By focusing on the relative cost of a standard basket of goods and services, PPP endeavors to harmonize the value of currencies across borders, illustrating what money can actually buy in its success or failure.
Data Plotting
Data plotting is an essential technique in presenting data visually, enabling easy interpretation and analysis of data patterns and trends. One of the most common visualizations is the scatter plot. In a scatter plot:
  • Each data point is represented as a dot plotted on a two-dimensional graph where the x-axis and y-axis correspond to different variables.
  • It is particularly useful for observing relationships or correlations between datasets.
  • In the context of GDP PPP data, years form the x-axis (horizontal), while GDP PPP values form the y-axis (vertical).
Creating a scatter plot involves selecting the axes, plotting the data points, and labeling both the axes and the graph to ensure clarity.
This method of graphical representation is powerful because it compresses complex data into a format that is immediately accessible and understandable, highlighting significant economic indicators and trends over time.

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Most popular questions from this chapter

The maximum discount value of the Entertainment庐 card for the 鈥淔ine Dining鈥� section, Edition ten, for various pages is given in Table 12.21 $$\begin{array}{|c|c|}\hline \text { Page number } & {\text { Maximum value (s) }} \\ \hline 4 & {16} \\ \hline 14 & {19} \\ \hline 25 & {19} \\\ \hline 25 & {17} \\ \hline 43 & {17} \\ \hline 42 & {15} \\ \hline 72 & {15} \\ \hline 85 & {17} \\ \hline 90 & {17} \\ \hline\end{array}$$ a. Decide which variable should be the independent variable and which should be the dependent variable. b. Draw a scatter plot of the ordered pairs. c. Calculate the least-squares line. Put the equation in the form of: \(\hat{y}=a+b x\) d. Find the correlation coefficient. Is it significant? e. Find the estimated maximum values for the restaurants on page ten and on page 70 . f. Does it appear that the restaurants giving the maximum value are placed in the beginning of the 鈥淔ine Dining鈥� section? How did you arrive at your answer? g. Suppose that there were 200 pages of restaurants. What do you estimate to be the maximum value for a restaurant listed on page 200? h. Is the least squares line valid for page 200? Why or why not? i. What is the slope of the least-squares (best-fit) line? Interpret the slope.

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For each of the following situations, state the independent variable and the dependent variable. a. A study is done to determine if elderly drivers are involved in more motor vehicle fatalities than other drivers. The number of fatalities per 100,000 drivers is compared to the age of drivers. b. A study is done to determine if the weekly grocery bill changes based on the number of family members. c. Insurance companies base life insurance premiums partially on the age of the applicant. d. Utility bills vary according to power consumption. e. A study is done to determine if a higher education reduces the crime rate in a population.

Use the following information to answer the next three exercises. A landscaping company is hired to mow the grass for several large properties. The total area of the properties combined is 1,345 acres. The rate at which one person can mow is as follows: \(\hat{y}=1350-1.2 x\) where \(x\) is the number of hours and \(\hat{y}\) represents the number of acres left to mow. How many hours will it take to mow all of the lawns? (When is \(\hat{y}=0 ?\)

Use the following information to answer the next three exercises. A landscaping company is hired to mow the grass for several large properties. The total area of the properties combined is 1,345 acres. The rate at which one person can mow is as follows: \(\hat{y}=1350-1.2 x\) where \(x\) is the number of hours and \(\hat{y}\) represents the number of acres left to mow. How many acres will be left to mow after 100 hours of work?
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