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NOTATION: Macroeconomic Systems Any variable with a bar (or overline) over it indicates a fixed variable or a variable that is determined outside the model. That is said to be exogenous to the model. All other variables are determined or solved within the model and are said to be endogenous. Delta, Δ, indicates a change or a marginal change in a variable. Typically an increase in the value of the variable. Chapter 2 Production function defined Y Out put of goods; identically equal to real income N Quantity of labour K Capital the bar indicates that Capital is fixed outside the system (or is exogenous) Goods market Y as above but also represents the supply function of the goods market Y identically equal to consumption and savings C consumption I investment S savings Labour market demand for labour services Nd supply of labour services Ns Bonds market demand for bonds Bd supply of bonds Bs Money market demand for money Md Ms fixed supply of money supply of money Chapter 4 R M V T P Ms market rate of interest fixed stock of money velocity of circulation of money Fixed velocity of circulation total volume of transactions but only in early part of Chapter 4 aggregate price level money supply T G W W/P MPN IS LM kPY fixed supply of money taxes government expenditure money wages real wages marginal product of labour investment - savings curve (in a simplified model) liquidity preference - money supply curve (in a simplified model) k is a constant, P is price and Y is output; this defines the money supply NOTATION: Macroeconomic Systems Continued Chapter 5 AD Y aggregate demand identically equal to consumption + savings + taxes also identically equal to consumption investment and government expenditure C S T I G R C G IS LM kPY consumption savings taxes investment government expenditure interest rate coupon value (only in later part of chapter 5) capital gain (only in later part of chapter 5) investment - savings curve (in a simplified model) liquidity preference - money supply curve (in a simplified model) k is a constant, P is price and Y is output; this defines the fixed stock of money (money supply) money wages fixed money wages W Chapter 6 AS aggregate supply A A/P money value of wealth real value of wealth W M B total stock of wealth held either in interest bearing bonds or cash balances H U represents people's tastes and preferences utility Chapter 7 Chapter 8 Chapter 9 Chapter 10 An PVn NPV Gs In Ct annual expenditure or cash outflows at time n annual cash inflows at time n present value of cash flows n net present value capital goods supply net investment cost at time t Chapter 11 T total volume of transactions W wealth Other variables are uniquely defined within this Chapter NOTATION: Macroeconomic Systems Continued Chapter 12 D deposits currency held by the public Cm deposits with commercial banks Dm R interest rate required reserves of commercial banks Rr Other variables are uniquely defined within this chapter Chapter 13 C consumption A autonomous expenditures such as government expenditure P prices T taxation I investment G government expenditures X exports IM imports Other variables are uniquely defined within this chapter Chapter 14 X V U MPN MC growth rate of real wages excess demand for labour number of vacancies filled number unemployed marginal physical product of labour marginal cost Chapter 14 Appendix Other variables are uniquely defined within this appendix Chapter 15 Other variables are uniquely defined within this chapter Chapter 16 Ex Eo X O B E CA R BP elasticity of demand for exports elasticity of demand for IMPORTS exports imports balance of trade domestic expenditure real net capital inflow domestic interest rate balance of payments Chapter 17 b marginal propensity to consume MPC marginal propensity to consume (computer simulation) equilibrium at time t Et Other variables are uniquely defined within this chapter and its appendices; and within the computer simulation models