What are the macroeconomic variables, Macroeconomics

Assignment Help:

Macroeconomics usually deals with the behaviour of aggregates of economic variables. An economic variable is a magnitude whose value may changes. Important variables in macroeconomics are gross national product, national income, consumption expenditure, investment expenditure, total money supply, general price level and overall employment. Some of these variables are ‘stocks’ and some are ‘flows’. 

1. Stock and flow 

A stock variable is a quantity measures at a specific point of the time. For example, the money supply is a stock variable, a definite amount on a specific date.

It is a certain amount at a specified point of time. In stating stock variable, both the amount and time must be clearly specified. 

In contrast, a flow variable is a quantity which can only be measured in terms of specific period of time. In studying flow variables, it is important to be specific about the time period in question. For example, it is meaningless to say that Mr. X’s income is $. 9,000 since it is not clear whether his income is $. 9,000 per month or per year. An income of $. 9,000 per month is quite different from an income of $. 9,000 per year. All the flow variables are thus rates (of flow) over some specified time period. 

Thus, stock variables have a time reference with them, while flow variables have a time dimension. 

2. Ratio Variable

 

In macroeconomic analysis, we also use ‘ratio’ variables. The variables in this category express the relationship between two flows, two stocks, or of stock-flows at a certain point of time.

 

The ratio between saving and income (S/Y) or ratio between consumption and income (C/Y) described as average propensity to save and average propensity to consume respectively is the flow ratio variables.

 

 

Liquidity is a ratio between two stocks, viz., liquid assets and total assets. Some variables like income-velocity of circulation of money may be expressed as a ratio of the flow of money transitions to the stock of money.


Related Discussions:- What are the macroeconomic variables

Aggregate demand in the is-lm model, Q. Aggregate demand in the IS-LM model...

Q. Aggregate demand in the IS-LM model? Aggregate demand Aggregate demand depends on Y and R in the IS-LM model As investments depend on R

Product of demand curve, The demand curve for product X is given by QXd = 3...

The demand curve for product X is given by QXd = 340 - 4PX.\ a) How much consumer surplus do consumers receive when Px = $45? b) How much consumer surplus do consumers receiv

What is social cost benefit analysis, It refers to the study of feasibility...

It refers to the study of feasibility of a project in terms of its total economic cost and total economic advantages. It means to compare total cost with total advantage if we

Functions of commercial bank - buying government securities, Buying ...

Buying government securities: When a commercial bank buys government bonds, the effect is substantially the same as that of lending - new money is created. To

Marginal cost of seating a theatergoer, 1. if the marginal cost of seating ...

1. if the marginal cost of seating a theatergoer is $5 an the elasticity of demand is -3, the profit maximizing price is? 2. A firm determined that its total cost of production

INFLATION-UNEEMPLOYMENT TRADE-OFF UNDER ADAPTIVE EEX, Explain how inflation...

Explain how inflation unemployment trade-off is not feasible under adaptive expectation.MEC002

Macroeconomic policy issues facing the u.s. economy, While referring to the...

While referring to the "EYE on YOUR LIFE" section on, discuss the macroeconomic policy issues facing the U.S. economy today based on the economic concepts you have learned in this

Decrease the market equilibrium monthly rent, Suppose that the government w...

Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply of housing. Assuming that demand remains unchanged, by how many units of

Money demand function, Assume that the money demand function is (M/P) d = 2...

Assume that the money demand function is (M/P) d = 2,200 - 200r, where r is the interest rate in percent. The money supply M is 2,000 and the price level P is2. If the price level

Find out the expected return on capital, Butthole Industries is buying out ...

Butthole Industries is buying out Avengers, Inc.  Butthole and Avengers both have market capitalizations equal to their fair value or the present value of their net cash flows.  Bu

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd