1 Introduction to Macroeconomics Flashcards
Define macroeconomics
The study of collections of people and firms and how their interactions through markets determine the overall performance of the economy.
What is a model?
A collection of mathematical equations that are used to study a particular economic issue.
What elements are needed when constructing models?
Inputs: parameters and exogenous variables.
Define parameter
An input generally fixed over time, except when the model experiments by changing it.
Define exogenous variable
An input that is allowed to change over time, but in a way determined by the model builder.
What elements are produced from models?
Endogenous variables
Define endogenous variables
An output that comes as a result of the model on parameters and exogenous variables.
What are flows?
Flows are measured within a period of time.
Earning income this year
What are stocks?
Stocks are measured at a point in time.
Having wealth.
Gross vs. Net
Gross- nominal value. Net- overall change.
