S10 MyCh01 C - Chapter 1 (Concluded) Relationship between...

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Chapter 1 (Concluded) Relationship between macro-economics and micro- economics In principle: Macro-economics only concerns about the aggregates not the individual In reality , some disaggregation is important regarding large firms and small firms types of assets, etc. 1
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Activities of macro-economists - A. Forecasters Use large economic models with thousands of equations to make forecasts in forecasting firms, research institutes and banks - B. Macroeconomic analysts in government, academia, research institutes Analyzing current situation and policy - C. Researchers in academia, government, institutions, banks - D. Data developers in government branches collect data, make estimates A. and B. use ideas and information from C. and D. 2
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Macroeconomic research Tries to find what goes on in economic reality say, if the Fed raises interest rate. How does it affect outputs That is the ‘transmission mechanism’ - THE BLACK BOX So, one experiments with a theory say, it affects the cost of capital, but the evidence is lacking. . Then one seeks other explanations.
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S10 MyCh01 C - Chapter 1 (Concluded) Relationship between...

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