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The economic model forecasting involves estimating several simultaneous equations which are generally behavioural equation mathematical identities and market clearing equations.The econometric model techniques is known also as simultaneous equation methods and complete system approach to forecasting. This techniques uses mathematical and statistical tools.
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Suppose there are two countries (home and foreign) and that two goods can be produced within those countries: machinery (M) and bread (B). Marginal product of labor (MPL) is given
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