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

Find the investment arrangement of portfolio , A financial manager wants t...

A financial manager wants to design an investment portfolio for a client. The client has $50,000 available to invest, and the planner has identified four investment options for the

Cost reduction, Cost Reduction Positive measures to effect a lowering o...

Cost Reduction Positive measures to effect a lowering of costs include:  reducing national insurance contributions (an  ad valorem  tax on employing labor);

Static and dynamic multiplier, The formula for calculating static and dyna...

The formula for calculating static and dynamic multiplier

Effect of distance on completed, From stock and watson 3rd edition introduc...

From stock and watson 3rd edition introduction to econometrics Using the data set CollegeDistance described, run a regression of years of completed education (ED) on distance to t

Lilie, What are the requirements for something to be considered money? Why ...

What are the requirements for something to be considered money? Why does the dollar have value?

Keynesion model, what would be effect of fiscal and monetry policy on price...

what would be effect of fiscal and monetry policy on price and output level if meges are flexible and rigied?

Producer equilibrium, If the MPPL/ MPPK in the production of a good are les...

If the MPPL/ MPPK in the production of a good are less than w/r, why is the produce not in producer equilibrium? Explain how, with no change in budget size for the firm and with th

Price of dvd players decreases, If the price of DVD players decreases, we c...

If the price of DVD players decreases, we can expect that the demand for DVDs will: a. increase. b. be unaffected. c. shift left. d. Decrease

BANK, HOW CAN CENTRAL BANK INFLUENCE THE STABILITY OF THE BANKING SYSTEM?

HOW CAN CENTRAL BANK INFLUENCE THE STABILITY OF THE BANKING SYSTEM?

Calculating size of labor force, What is the size of the labor force if the...

What is the size of the labor force if the unemployment rate is 6%, the population is 300 million, and the number unemployed is 6 million

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