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Abstract:  Economic theory consists of models designed to improve our understanding of economic phenomena. There have been numerous different kinds of data such as goods and services markets and labor markets observed and gathered in the past. The sequential nature of these data require us to account for the dynamic nature using special statistical skill and techniques. Time series analysis provide the appropriate methods necessary in order to analyze sequential data.
It may be problematic to picture the essential, underlying trend of the data if the time series has a lot of noise. To distinguish the signal and the noise from each other, various linear and nonlinear smoothers must be applied.

This paper collected a century’s worth of the data and used a distribution to map out the overall trend of the goods and services markets and labor markets. The data was plotted in a spreadsheet, and multiple fitting models were tested out to see which one fit the data the best. The data was chosen due to its significance in the evaluation of stocks’ values, and the economic theories and models were used due to its ability to incorporate rapidly fluctuating data into statistical analysis. Both micro and macroeconomics were explained in terms of theories and models.

Keywords: Economic theories and models, Goods and services markets, Labor markets, Micro and macroeconomics