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Government revenue, government spending and net exports
G, NT and NX are exogenous variables in the classical model
In the classical model (and in most macroeconomic models) government spending and net taxes are presumed to be exogenous variables determined by the government.
Net Exports NX is also an exogenous variable that means both imports Im and exports X are exogenous variables. Exports are determined by rest of the world and this variable is exogenous in most macro models. It's possible to presume that imports depend on real interest rate by the same arguments we used for consumption. It would be possible to modify classical model such that imports depended on real interest rate though results would be largely the same. Consequently we presume that imports are exogenous as well.
using a graph of the classical labour market,illustrate the effects of a real wage existing in the market that is lower than the equilibrium real wage.what will eventually happen i
tax be cut as the main policy target
Suppose that between January 2011 and January 2012 the total number of people employed and the unemployment rate both fell. Briefly explain how this is possible. [2 marks]
Including different interest rates with different maturities would complicate the models however it wouldn't buy you very much. Because interest rates with different maturities are
Since their inception, VAR models have been at the centre of many controversies associated with econometric modelling. The recurring criticism throughout history is due to the mode
A government can finance its budget deficit by doing all of the following except: A. borrowing from its central bank. B. printing money. C. selling bonds. D. buying bonds.
Liberalisation and Changing Sources of FDI: European countries had been major sources of FDI inflows to India until 1990. However, their relative importance declined in the
1. Consider a natural monopoly. I. Show graphically and discuss how price and quantity are set by the natural monopolist. II. Define the areas corresponding to the consumers'
The U.K. produces and imports eggs. Suppose that the government imposed a quota on imports: Foreign suppliers could export no more than Q eggs (regardless of price). What effect do
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