W1P4 Macroeconomic Models

Question 1

Is the following statement correct or incorrect?

“Services do not contribute to GDP as much as industry
because industry produces tangible goods”

Answer 1

Incorrect

The statement is wrong as services are treated in the same way as physical i.e. tangible goods when counting GDP

Question 2

In a macroeconomic model, what is an EXOGENOUS variable?

Answer 2

exogenous variables are the variables that are given to the model from outside and are therefore not explained by the model

Question 3

In a macroeconomic model, what is an ENDOGENOUS variable?

Answer 3

Endogenous variables are the variables that are explained by the model using the exogenous variables and economic theory

Question 4

In a macroeconomic model, what is the difference between an exogenous and an endogenous variable?

Answer 4

In a macroeconomic model, EXOGENOUS variables are NOT explained by the model whereas ENDOGENOUS variables ARE explained by the model