AP_Krugman_Textbook

the y-variable. In scatter diagrams, a curve is typically fitted to the scatter of points;
that is, a curve is drawn that approximates as closely as possible the general relation-
ship between the variables. As you can see, the fitted curve in Figure A.8 is upward-
sloping, indicating the underlying positive relationship between the two variables.
Scatter diagrams are often used to show how a general relationship can be inferred
from a set of data.
A pie chartshows the share of a total amount that is accounted for by various com-
ponents, usually expressed in percentages. For example, Figure A.9 is a pie chart that
depicts the various sources of revenue for the U.S. government budget in 2005, ex-
pressed in percentages of the total revenue amount, $2,153.9 billion. As you can see, so-
cial insurance receipts (the revenues collected to fund Social Security, Medicare, and
unemployment insurance) accounted for 37% of total government revenue, and indi-
vidual income tax receipts accounted for 43%.

appendix Graphs in Economics 43

Section I Basic Economic Concepts

figure A.8

Scatter Diagram

In a scatter diagram, each point represents the

corresponding values of the x- and y-variables

for a given observation. Here, each point indi-

cates the observed average life expectancy and

the log of GNP per capita of a given country for a

sample of 158 countries. The upward-sloping fit-

ted line here is the best approximation of the

general relationship between the two variables.

Source:Eduard Bos et al., Health, Nutrition, and Population

Indicators: A Statistical Handbook(Washington, DC: World

Bank, 1999).

064 81012

85

75

65

55

45

35

Life expectancy

at birth (years)

Log GNP (per capita)

Standard of Living and Average Life Expectancy

figure A.9

Pie Chart

A pie chart shows the percentages of a total

amount that can be attributed to various

components. This pie chart shows the per-

centages of total federal revenues received

from each source.

Source:Office of Management and Budget.

Other

4%

Excise

taxes

3%

Receipts by Source for U.S. Government Budget 2005

(total: $2,153.9 billion)

Social

insurance

receipts

37%

Individual

income

taxes

43%

Corporation

income taxes

13%