Three types of graph commonly used in business and government reports

Some people prefer words to numbers in describing how economics works. Sometimes words are clumsy for description, and graphs are helpful to represent their economic information. A few types of graph occur frequently in academic, business, and government reports, and it is worth being familiar with them.

Scatter graphs (also known as X-Y graphs)
Suppose we have received some data that says that when an economy produced $1000 million of goods, imports were $100 million. When the economy produced $2000 million, imports were $400 million. When the economy produced $3000 million, imports were $1000 million. Looking at the data, we could say that as the economy became larger, imports increased.

We could alternatively draw a type of graph using the data, known as a scatter graph. We draw evenly spaced points on the line at the bottom of the graph, called the x-axis, including the points from the data describing production. We draw evenly spaced points on the line at the left side of the graph, called the y-axis, including the points from the data describing exports. We have joined up the points with a line.



The graph shows that as production increases, so do exports, which is what we said earlier. We can also see that as production grows, exports seem to be getting larger more quickly. We can also guess at what exports would be if the economy produced other amounts of goods, by seeing where the line goes. For example, when production is $1500 million, we can estimate that exports would be about $230 million.

Bar charts
Suppose that we have been told a little more information, that the country producing $1000 million of goods is called Angoland, the country producing $2000 million is called Beninia, and the country producing $3000 million is called Congoroon. We can draw a graph with the countries along the x-axis and production on the y-axis. For each country, we draw a column up to their production. The graph looks like this:



We can see quickly from the graph that Congoroon has the largest production, while Angoland has the smallest. Bar charts can be particularly useful if we have much disorganised data. We can see quickly which countries are the largest, smallest, or near the middle of the data.

Pie charts
Pie charts are another way of presenting the information in the bar chart. Angoland produces a sixth (1000/6000) of the total production of the three countries, Beninia produces a third (2000/6000), and Congoroon half (3000/6000). A circle is drawn, with a sixth of the area marked by Angoland, a third by Beninia, and half by Congoroon, like this:



Pie charts allow us to see quickly how important a country is for production and compare countries, which might not be easy from the numbers.