Interpreting Visual Displays of Economic Information

Instructor: LeRon Haire
The lesson will introduce and analyze various methods used by organizations that not only visually illustrate economic information but will explain which methods are best used to interpret that information.

The Interpretation of Visual Information

Imagine that you are an accountant for a prestigious firm, and you have been tasked with explaining several numerical figures regarding the economy. How can you translate the economic information so that it makes sense to the firm's employees?

One of the ways this can be done is through the use of a visual display. These displays are designed to visually illustrate the information that is shown to provide more clarity. How can these visual displays be used to interpret economic information pertaining to the inflation rate, unemployment rate, and the economic growth rate? Let's take a closer look at how this can be done.

Using Visual Displays to Interpret the Inflation Rate

The term inflation rate can be described as the increase, typically as a percentage, in the level of prices for services and goods. Unless you are well-versed in the art of economics, it can be very difficult to understand what the numbers mean in regards to inflation. This is where a visual display can be a big help. Let's take a look at a sample line graph to see just how it can help visually interpret the economic information given by inflation rates.

example of a line graph

The line graph is a visual representation that shows the changes in information over a specific period of time. A line graph can often be identified by having a line that connects plots on the graph as shown above. In the graph, you will notice that the horizontal x axis displays the years that the observations are being recorded while the vertical y axis displays the numerical or actual values for each category.

The line graph is ideal to visually interpret economic information, such as inflation rates, because it is designed to represent specific periods of time. Since inflation rates also occur over a specified period of time, it makes logical sense to use a line graph to illustrate and interpret the information that accompanies the chart.

Using Visual Displays to Interpret the Unemployment Rate

The importance of visual displays is often under-estimated in regards to their ability to interpret economic information to those that are less economically savvy. One great example of this is when it comes to statistics that deal with the unemployment rate.

The unemployment rate is classified as the complete percentage of the complete labor force that is unemployed but actively seeking work. The sheer volume of the numbers associated with unemployment can be intimidating to the average person.

One of the best types of visual displays that can be used to illustrate the unemployment rate is a bar graph. A bar graph, which also visually interprets economic information, is a type of graph that can be horizontal or vertical and displays numerical values that are represented by the width or length of rectangular-shaped lines. A bar graph is best used when comparing multiple amounts of data.

For example, let's take a look at this illustration and see just how simple the information provided can be interpreted:

bar graph

As evidenced above, it is simple to read and interpret a bar graph, and it is very useful when it comes to comparing information in categories, such as the unemployment rate (which is often broken down into categories like age or gender).

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