I-1.A. - to explain endogenous variables. Table 1.6 For...

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I.A. Thinking about Macroeconomics 1. What is Macroeconomics? Macroeconomics asked the “Big” questions What makes a country rich or poor? Figure 1.1 What makes an economy stable or volatile? Figure 1.2, 1.3 2. Economic Models (a) Same basic approach as in microeconomics—create models (simplifications of reality) to explain and approximate reality. More specifically, use exogenous variables and a theoretical mechanism
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Unformatted text preview: to explain endogenous variables. Table 1.6 For example, use the pace of technological progress (exogenous variable) to explain output growth and its fluctuations about the trend (endogenous variables). (b) Market analysis is the theoretical mechanism that relates the exogenous and endogenous variables as in microeconomics Figures 1.7-1.10...
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