Q. 2.167 - Elementary Statistics

Question

The Federal Reserve System publishes weekly figures for M2 money supply in the document Money Stock Measures. M2 includes such things as cash in circulation, deposits in checking accounts, nonbank traveller's checks, accounts such as savings deposits, and money-market mutual funds. The following bar chart provides data on the M2 money supply over $3$ months during one year.

a. What is wrong with the bar chart?

b. Construct a version of the bar chart with a nontruncated and unmodified vertical axis.

c. Construct a version of the bar chart in which the vertical axis is modified in an acceptable manner.

Step-by-Step Solution

Answer

(a) The wrong with the chart is that bars do not start at $0$

(b) 

(c)

Part (a) Step 1: Given information

The given data is 

Part (a) Step 2: Explanation

A bar chart, sometimes known as a bar graph, is a graph or chart that displays categorical data using rectangular bars with heights or lengths proportional to the values they represent.

The wrong with the chart is that bars do not starts at $0$.

Part (b) Step 1: Given information

The given data is

Part (b) Step 2: Explanation

The y axis of a truncated graph does not begin at $0$. These graphs might provide the impression of significant change when there is actually very little. While shortened graphs can be useful for overdrawing differences or saving space, they are frequently avoided.

For the chart with untruncated and unmodified vertical axis the bar now should start with $0$. So,

Part (c) Step 1: Given information

The given data is 

Part (c) Step 2: Explanation

For the chart with modified vertical axis the bar now should start at $0$ and $//$ should represent in place of truncation.

So, the graph will be :