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

What is purchasing power, What is Purchasing power One problem in usin...

What is Purchasing power One problem in using exchange rate when comparing GDP per capita between countries is that is fluctuates quite a lot. A way of avoiding dependence on

Reserves and a reserve requirement, If the Banking system has $500,000 in d...

If the Banking system has $500,000 in demand deposit liabilities, $125,000 in total reserves and a reserve requirement of 15%: What is the maximum amount by which the money supply

Answer for questions, How can we answer in Economic terms this questions: W...

How can we answer in Economic terms this questions: Why should the government consider to increase tax on cigarette

Calculate present value and interest rate, You win a lottery. You have the ...

You win a lottery. You have the choice of two ways to be paid. If you pick Payout Scheme X, you get $2,750 today. If you pick Payout Scheme Y, you get three payments: $1,000 today,

What is the marginal product, What is the marginal product? The margina...

What is the marginal product? The marginal product of an input is the extra quantity of output which is generated by using one more unit of which input. Marginal product of

Tax-deductible and interest rate, Suppose that Lilistan has two types of ci...

Suppose that Lilistan has two types of citizens: low-income citizens (income = $20,000) and high-income citizens (income = $80,000). Interest income is currently taxed and each typ

Price of beer to increase by 10 percent, A recent article estimated that th...

A recent article estimated that the elasticity of the rate of gonorrhea with respect to the price of beer is about 0.8. If this estimate is correct, are unprotected sex and beer su

Accounting profit-economic profit of present value, 1. Christopher has $200...

1. Christopher has $200,000 to invest, and he is considering the following business opportunity. He would use his $200,000 to buy a mechanical self-service car wash. He'll earn $40

Assignment #1, Explain the meaning of a production possibilities curve

Explain the meaning of a production possibilities curve

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