Macroeconomics examines aggregate economic measures for entire economies, such as total output, income, spending, employment and prices. It analyzes topics like economic growth, inflation, recession and the effects of fiscal and monetary policy. Microeconomics looks at individual agents and markets. Macroeconomics deals with economy-wide phenomena and seeks to understand how the whole economic system functions.
The document provides an introduction to macroeconomics, describing the four main sectors of the macroeconomy - households (consumers), business (producers), government (regulators and tax collectors), and foreign (other economies). It explains that households consume goods and services, businesses produce goods and services for households to consume, the government collects taxes and provides services, and the foreign sector involves international trade. It also introduces the circular flow model showing how income and spending flow between these sectors.
Here are the steps to calculate the level of GDP using the data provided:
Consumption (C) = £800bn
Government spending (G) = £300bn
Gross capital formation (I) = £250bn
Exports (X) = £400bn
Imports (M) = £350bn
Using the expenditure method formula:
GDP = C + I + G + (X - M)
= £800bn + £250bn + £300bn + (£400bn - £350bn)
= £800bn + £250bn + £300bn + £50bn
= £1400bn
Therefore, the level of GDP using the data provided
Macroeconomics is the study of the economy as a whole, including key topics such as national income, unemployment, inflation, and economic growth. It helps policymakers design fiscal and monetary policies. National income data are important for economic planning and international comparisons of economic development and welfare. National income can be measured using the product, income, and expenditure methods, each of which has limitations due to issues like double-counting, exclusion of non-market activities, and difficulties valuing informal sector output.
Economics environment in Business environment and law Mathivanan Mba
The document discusses various aspects of the economic environment in India including definitions of key economic terms, different economic systems, factors that influence the economic environment, and the roles of financial institutions and public sector enterprises. It provides details on capitalism, socialism, and mixed economies as well as monetary policy, fiscal policy, and other government economic policies.
The circular flow of income shows the interconnected flows of goods, services, and money between households and firms in an economy. Households provide factor services like labor to firms and receive income, while firms produce goods and services and sell them to households. This results in a circular flow as money flows from households to firms and goods/services flow from firms to households. GDP can be measured using the income, expenditure, and production approaches, which should all equal the total value of final goods produced in an economy in a given time period when accounting properly.
This document discusses key macroeconomic concepts and measurement including:
- GDP can be measured as the sum of value added by all producers, as the sum of income claims generated in production, or as the spending on final goods and services.
- GDP measures domestic production while GNI measures income earned by a country's residents, including income from overseas.
- Potential GDP is the level of output if the economy was at full employment, and the GDP gap is the difference between actual and potential GDP.
Macroeconomics examines aggregate economic measures for entire economies, such as total output, income, spending, employment and prices. It analyzes topics like economic growth, inflation, recession and the effects of fiscal and monetary policy. Microeconomics looks at individual agents and markets. Macroeconomics deals with economy-wide phenomena and seeks to understand how the whole economic system functions.
The document provides an introduction to macroeconomics, describing the four main sectors of the macroeconomy - households (consumers), business (producers), government (regulators and tax collectors), and foreign (other economies). It explains that households consume goods and services, businesses produce goods and services for households to consume, the government collects taxes and provides services, and the foreign sector involves international trade. It also introduces the circular flow model showing how income and spending flow between these sectors.
Here are the steps to calculate the level of GDP using the data provided:
Consumption (C) = £800bn
Government spending (G) = £300bn
Gross capital formation (I) = £250bn
Exports (X) = £400bn
Imports (M) = £350bn
Using the expenditure method formula:
GDP = C + I + G + (X - M)
= £800bn + £250bn + £300bn + (£400bn - £350bn)
= £800bn + £250bn + £300bn + £50bn
= £1400bn
Therefore, the level of GDP using the data provided
Macroeconomics is the study of the economy as a whole, including key topics such as national income, unemployment, inflation, and economic growth. It helps policymakers design fiscal and monetary policies. National income data are important for economic planning and international comparisons of economic development and welfare. National income can be measured using the product, income, and expenditure methods, each of which has limitations due to issues like double-counting, exclusion of non-market activities, and difficulties valuing informal sector output.
Economics environment in Business environment and law Mathivanan Mba
The document discusses various aspects of the economic environment in India including definitions of key economic terms, different economic systems, factors that influence the economic environment, and the roles of financial institutions and public sector enterprises. It provides details on capitalism, socialism, and mixed economies as well as monetary policy, fiscal policy, and other government economic policies.
The circular flow of income shows the interconnected flows of goods, services, and money between households and firms in an economy. Households provide factor services like labor to firms and receive income, while firms produce goods and services and sell them to households. This results in a circular flow as money flows from households to firms and goods/services flow from firms to households. GDP can be measured using the income, expenditure, and production approaches, which should all equal the total value of final goods produced in an economy in a given time period when accounting properly.
This document discusses key macroeconomic concepts and measurement including:
- GDP can be measured as the sum of value added by all producers, as the sum of income claims generated in production, or as the spending on final goods and services.
- GDP measures domestic production while GNI measures income earned by a country's residents, including income from overseas.
- Potential GDP is the level of output if the economy was at full employment, and the GDP gap is the difference between actual and potential GDP.
Introduction
In life, there are universal laws that govern everything we do. These laws are so perfect that if you were to align yourself with them, you could have so much prosperity that it would be coming out of your ears. This is because God created the universe in the image and likeness of him. It is failure to follow the universal laws that causes one to fail. The laws that were created consisted of the following: ·
Law of Gratitude: The Law of Gratitude states that you must show gratitude for what you have. By having gratitude, you speed your growth and success faster than you normally would. This is because if you appreciate the things you have, even if they are small things, you are open to receiving more.
Law of Attraction: The Law of Attraction states that if you focus your attention on something long enough you will get it. It all starts in the mind. You think of something and when you think of it, you manifest that in your life. This could be a mental picture of a check or actual cash, but you think about it with an image.
Law of Karma: the Law of Karma states that if you go out and do something bad, it will come back to you with something bad. If you do well for others, good things happen to you. The principle here is to know you can create good or bad through your actions. There will always be an effect no matter what.
Law of Love: the Law of Love states that love is more than emotion or feeling; it is energy. It has substance and can be felt. Love is also considered acceptance of oneself or others. This means that no matter what you do in life if you do not approach or leave the situation out of love, it won't work.
Law of Allowing: The Law of Allowing states that for us to get what we want, we must be receptive to it. We can't merely say to the Universe that we want something if we don't allow ourselves to receive it. This will defeat our purpose for wanting it in the first place.
Law of Vibration: the Law of Vibration states that if you wish on something and use your thoughts to visualize it, you are halfway there to get it. To complete the cycle you must use the Law of Vibration to feel part of what you want. Do this and you'll have anything you want in life.
For everything to function properly there has to be structure. Without structure, our world, or universe, would be in utter chaos. Successful people understand universal laws and apply them daily. They may not acknowledge that to you, but they do follow the laws. There is a higher power and this higher power controls the universe and what we get out of it. People who know this, but wish to direct their own lives, follow the reasons. Successful people don't sit around and say "I'll try," they say yes and act on it.
Chapter - 1
The Law of Attraction
The law of attraction is the most powerful force in the universe. If you work against it, it can only bring you pain and misery. Successful people know this but have kept it hidden from the lower class for centuries because th
This document discusses key macroeconomic measures used by governments, including GDP, GNP, NNP, NDP, and factors that influence comparing economic growth between countries. It also covers the circular flow of income, aggregate expenditure, consumption and investment functions, and differences between the Keynesian and monetarist approaches to macroeconomics.
Here are three questions related to the material:
1. Why is GDP considered a better measure of economic well-being than GNP? GDP captures total production that occurs within a country's borders, including production by foreign-owned firms, while GNP captures production by citizens of that country wherever it occurs. GDP is therefore a better reflection of the total output and economic activity in a country.
2. What are some limitations of using GDP as a measure of economic well-being? While GDP is a useful measure, it does not capture many factors that contribute to quality of life and well-being, such as environmental quality, leisure time, inequality, health, education levels, etc. GDP also does not distinguish between beneficial and harmful
This document provides definitions and concepts related to macroeconomics and the macroeconomic environment of business. It defines macroeconomics as the study of the overall economy and discusses key macroeconomic objectives, indicators, and policies. It also explains concepts like GDP, GNP, inflation, money supply, and how they are measured. National income accounting and different economic systems are also summarized.
The document discusses several key concepts in national income accounting:
1) GDP and GNP measure the aggregate output of final goods and services in an economy or produced domestically after accounting for international transactions.
2) Value added method avoids double counting by adding the value contributed at each stage of production.
3) Goods and services are evaluated at market prices to aggregate different types of output.
4) Stock variables measure levels at a point in time, while flow variables measure changes over a period of time like GDP.
This document provides an introduction to macroeconomics. It defines macroeconomics as dealing with the functioning of the overall economy and studying aggregates like income, consumption, investment and price levels. The major concerns of macroeconomics include aggregate demand, aggregate supply, inflation, economic growth, and unemployment. Understanding macroeconomic aggregates is useful for policymakers in formulating monetary, fiscal and other policies. The document also discusses the differences between microeconomics and macroeconomics.
The circular flow of income model describes the flow of money between producers and consumers. Producers (firms) pay households for resources and labor, then households use that income to buy goods and services from firms, completing the circular flow. The model can be expanded to include financial institutions, government, and foreign trade. Equilibrium occurs when total leakages (savings, taxes, imports) equal total injections (investment, government spending, exports).
I do not have enough information to determine the category of military expenditure or present two situations where GDP=GDE based on the given document. The document provides an overview of macroeconomics concepts like GDP, GNP, national income accounting, business cycles, inflationary and recessionary gaps, but it does not specify details about military expenditure categories or conditions for GDP=GDE.
The document discusses key indicators of a country's macro environment including gross domestic product, GDP deflator, consumer price index, sectoral shares of the economy, savings and investment rates, inflation rates, money supply, foreign trade, foreign exchange reserves, economic infrastructure, and social indicators; it also discusses factors that influence a country's competitiveness globally such as availability of skilled managers, total quality management practices, and treatment of labor.
1) The document discusses the circular flow of economic activities and income between firms and households in a two-sector economy. Firms produce goods and services using inputs from households, and households receive income from firms which they use for consumption.
2) It then expands on the circular flow to a four-sector economy including government and foreign trade. Government engages in tax collection and spending, and imports and exports represent international flows of goods and services.
3) Key macroeconomic concepts are defined including aggregate demand, aggregate supply, stock and flow variables, intermediate and final goods, capital formation, government revenue and expenditure, employment and unemployment, and the consumption function.
The document discusses macroeconomics and the circular flow of income in an economy. It covers key topics such as the behavior of the overall economy, economic growth and fluctuations, and the interactions between goods, labor, and asset markets. It also presents figures showing historical data on various economic indicators in the US such as output, unemployment, prices, exports/imports, and government spending/taxes. Furthermore, it illustrates the circular flow of income between firms, households, and financial markets through consumption, income payments, savings, taxes, and other factors.
The document discusses key economic goals and indicators used to measure economic performance, including low inflation, low unemployment, a healthy balance of payments, and high economic growth. It defines inflation, unemployment, balance of payments, and economic growth. For each concept, it provides the measurement used (e.g. Consumer Price Index for inflation, unemployment rate for unemployment) and a brief explanation of the measurement. It also discusses GDP and the three approaches used to calculate it - output, expenditure, and income.
The document discusses the circular flow of income model and its key components. It describes the five sectors - households, firms, government, financial institutions, and foreign - and the flows between them. It explains how savings, taxes, and imports are leakages that reduce income circulating in the economy, and how investment, government spending, and exports are injections that increase income circulating in the economy. Equilibrium occurs when total leakages equal total injections.
This document provides an overview of macroeconomics concepts including the definition of macroeconomics, national income measurement, and the circular flow of income. It describes macroeconomics as dealing with the behavior of the overall economy, including outputs, growth, inflation, unemployment, and balance of payments. It also outlines the circular flow of income between households and businesses and how this is represented in two-sector, three-sector, and four-sector economic models.
The document describes the circular flow of income model and its evolution from a simple two-sector model to a more complex five-sector model. It explains the key components of each model - households and firms in the two-sector model and the additions of government and foreign sectors in later models. It also discusses the concept of equilibrium between total leakages (savings, taxes, imports) and injections (investment, government spending, exports) and how disequilibrium can cause economic expansion or contraction until equilibrium is regained.
This document discusses key macroeconomic concepts including aggregate demand, aggregate supply, and macroeconomic equilibrium. It defines aggregate demand as the total demand for goods and services in an economy and identifies its components as consumption, investment, government spending, and net exports. Aggregate supply is defined as the total output an economy can produce. The document explains that macroeconomic equilibrium exists when aggregate demand is equal to aggregate supply, meaning the quantity demanded is equal to the quantity supplied at the current price level.
The circular flow model describes the continuous movement of money between households and businesses in an economy. There are five sectors - households, businesses, financial institutions, government and overseas. Money flows as households receive income from selling resources to businesses, then spend it on goods and services from businesses, in an endless circular flow. The financial sector intermediates between savers and borrowers. Government taxation reduces household income while spending injects money back in. Imports and exports affect the flows between the domestic and overseas sectors.
The circular flow model describes the continuous movement of money between households and businesses in an economy. There are five key sectors - households, businesses, financial institutions, government and overseas. Money flows between these sectors through factor markets as households supply resources to businesses in exchange for income, and product markets as businesses sell goods and services to households. The financial sector intermediates between savers and borrowers. Government taxation reduces household income while government spending injects money back into the economy. The open economy model includes imports, exports and the external sector in the circular flow.
Contributions to Policy Research in Support of the Reform and Recovery Proces...ESSP1
Alemayehu Seyoum Taffesse; Launch of “the Ethiopian National Dairy Development Strategy 2022–2031”
The CGIAR Initiative on National Policy and Strategies (NPS)
Introduction
In life, there are universal laws that govern everything we do. These laws are so perfect that if you were to align yourself with them, you could have so much prosperity that it would be coming out of your ears. This is because God created the universe in the image and likeness of him. It is failure to follow the universal laws that causes one to fail. The laws that were created consisted of the following: ·
Law of Gratitude: The Law of Gratitude states that you must show gratitude for what you have. By having gratitude, you speed your growth and success faster than you normally would. This is because if you appreciate the things you have, even if they are small things, you are open to receiving more.
Law of Attraction: The Law of Attraction states that if you focus your attention on something long enough you will get it. It all starts in the mind. You think of something and when you think of it, you manifest that in your life. This could be a mental picture of a check or actual cash, but you think about it with an image.
Law of Karma: the Law of Karma states that if you go out and do something bad, it will come back to you with something bad. If you do well for others, good things happen to you. The principle here is to know you can create good or bad through your actions. There will always be an effect no matter what.
Law of Love: the Law of Love states that love is more than emotion or feeling; it is energy. It has substance and can be felt. Love is also considered acceptance of oneself or others. This means that no matter what you do in life if you do not approach or leave the situation out of love, it won't work.
Law of Allowing: The Law of Allowing states that for us to get what we want, we must be receptive to it. We can't merely say to the Universe that we want something if we don't allow ourselves to receive it. This will defeat our purpose for wanting it in the first place.
Law of Vibration: the Law of Vibration states that if you wish on something and use your thoughts to visualize it, you are halfway there to get it. To complete the cycle you must use the Law of Vibration to feel part of what you want. Do this and you'll have anything you want in life.
For everything to function properly there has to be structure. Without structure, our world, or universe, would be in utter chaos. Successful people understand universal laws and apply them daily. They may not acknowledge that to you, but they do follow the laws. There is a higher power and this higher power controls the universe and what we get out of it. People who know this, but wish to direct their own lives, follow the reasons. Successful people don't sit around and say "I'll try," they say yes and act on it.
Chapter - 1
The Law of Attraction
The law of attraction is the most powerful force in the universe. If you work against it, it can only bring you pain and misery. Successful people know this but have kept it hidden from the lower class for centuries because th
This document discusses key macroeconomic measures used by governments, including GDP, GNP, NNP, NDP, and factors that influence comparing economic growth between countries. It also covers the circular flow of income, aggregate expenditure, consumption and investment functions, and differences between the Keynesian and monetarist approaches to macroeconomics.
Here are three questions related to the material:
1. Why is GDP considered a better measure of economic well-being than GNP? GDP captures total production that occurs within a country's borders, including production by foreign-owned firms, while GNP captures production by citizens of that country wherever it occurs. GDP is therefore a better reflection of the total output and economic activity in a country.
2. What are some limitations of using GDP as a measure of economic well-being? While GDP is a useful measure, it does not capture many factors that contribute to quality of life and well-being, such as environmental quality, leisure time, inequality, health, education levels, etc. GDP also does not distinguish between beneficial and harmful
This document provides definitions and concepts related to macroeconomics and the macroeconomic environment of business. It defines macroeconomics as the study of the overall economy and discusses key macroeconomic objectives, indicators, and policies. It also explains concepts like GDP, GNP, inflation, money supply, and how they are measured. National income accounting and different economic systems are also summarized.
The document discusses several key concepts in national income accounting:
1) GDP and GNP measure the aggregate output of final goods and services in an economy or produced domestically after accounting for international transactions.
2) Value added method avoids double counting by adding the value contributed at each stage of production.
3) Goods and services are evaluated at market prices to aggregate different types of output.
4) Stock variables measure levels at a point in time, while flow variables measure changes over a period of time like GDP.
This document provides an introduction to macroeconomics. It defines macroeconomics as dealing with the functioning of the overall economy and studying aggregates like income, consumption, investment and price levels. The major concerns of macroeconomics include aggregate demand, aggregate supply, inflation, economic growth, and unemployment. Understanding macroeconomic aggregates is useful for policymakers in formulating monetary, fiscal and other policies. The document also discusses the differences between microeconomics and macroeconomics.
The circular flow of income model describes the flow of money between producers and consumers. Producers (firms) pay households for resources and labor, then households use that income to buy goods and services from firms, completing the circular flow. The model can be expanded to include financial institutions, government, and foreign trade. Equilibrium occurs when total leakages (savings, taxes, imports) equal total injections (investment, government spending, exports).
I do not have enough information to determine the category of military expenditure or present two situations where GDP=GDE based on the given document. The document provides an overview of macroeconomics concepts like GDP, GNP, national income accounting, business cycles, inflationary and recessionary gaps, but it does not specify details about military expenditure categories or conditions for GDP=GDE.
The document discusses key indicators of a country's macro environment including gross domestic product, GDP deflator, consumer price index, sectoral shares of the economy, savings and investment rates, inflation rates, money supply, foreign trade, foreign exchange reserves, economic infrastructure, and social indicators; it also discusses factors that influence a country's competitiveness globally such as availability of skilled managers, total quality management practices, and treatment of labor.
1) The document discusses the circular flow of economic activities and income between firms and households in a two-sector economy. Firms produce goods and services using inputs from households, and households receive income from firms which they use for consumption.
2) It then expands on the circular flow to a four-sector economy including government and foreign trade. Government engages in tax collection and spending, and imports and exports represent international flows of goods and services.
3) Key macroeconomic concepts are defined including aggregate demand, aggregate supply, stock and flow variables, intermediate and final goods, capital formation, government revenue and expenditure, employment and unemployment, and the consumption function.
The document discusses macroeconomics and the circular flow of income in an economy. It covers key topics such as the behavior of the overall economy, economic growth and fluctuations, and the interactions between goods, labor, and asset markets. It also presents figures showing historical data on various economic indicators in the US such as output, unemployment, prices, exports/imports, and government spending/taxes. Furthermore, it illustrates the circular flow of income between firms, households, and financial markets through consumption, income payments, savings, taxes, and other factors.
The document discusses key economic goals and indicators used to measure economic performance, including low inflation, low unemployment, a healthy balance of payments, and high economic growth. It defines inflation, unemployment, balance of payments, and economic growth. For each concept, it provides the measurement used (e.g. Consumer Price Index for inflation, unemployment rate for unemployment) and a brief explanation of the measurement. It also discusses GDP and the three approaches used to calculate it - output, expenditure, and income.
The document discusses the circular flow of income model and its key components. It describes the five sectors - households, firms, government, financial institutions, and foreign - and the flows between them. It explains how savings, taxes, and imports are leakages that reduce income circulating in the economy, and how investment, government spending, and exports are injections that increase income circulating in the economy. Equilibrium occurs when total leakages equal total injections.
This document provides an overview of macroeconomics concepts including the definition of macroeconomics, national income measurement, and the circular flow of income. It describes macroeconomics as dealing with the behavior of the overall economy, including outputs, growth, inflation, unemployment, and balance of payments. It also outlines the circular flow of income between households and businesses and how this is represented in two-sector, three-sector, and four-sector economic models.
The document describes the circular flow of income model and its evolution from a simple two-sector model to a more complex five-sector model. It explains the key components of each model - households and firms in the two-sector model and the additions of government and foreign sectors in later models. It also discusses the concept of equilibrium between total leakages (savings, taxes, imports) and injections (investment, government spending, exports) and how disequilibrium can cause economic expansion or contraction until equilibrium is regained.
This document discusses key macroeconomic concepts including aggregate demand, aggregate supply, and macroeconomic equilibrium. It defines aggregate demand as the total demand for goods and services in an economy and identifies its components as consumption, investment, government spending, and net exports. Aggregate supply is defined as the total output an economy can produce. The document explains that macroeconomic equilibrium exists when aggregate demand is equal to aggregate supply, meaning the quantity demanded is equal to the quantity supplied at the current price level.
The circular flow model describes the continuous movement of money between households and businesses in an economy. There are five sectors - households, businesses, financial institutions, government and overseas. Money flows as households receive income from selling resources to businesses, then spend it on goods and services from businesses, in an endless circular flow. The financial sector intermediates between savers and borrowers. Government taxation reduces household income while spending injects money back in. Imports and exports affect the flows between the domestic and overseas sectors.
The circular flow model describes the continuous movement of money between households and businesses in an economy. There are five key sectors - households, businesses, financial institutions, government and overseas. Money flows between these sectors through factor markets as households supply resources to businesses in exchange for income, and product markets as businesses sell goods and services to households. The financial sector intermediates between savers and borrowers. Government taxation reduces household income while government spending injects money back into the economy. The open economy model includes imports, exports and the external sector in the circular flow.
Contributions to Policy Research in Support of the Reform and Recovery Proces...ESSP1
Alemayehu Seyoum Taffesse; Launch of “the Ethiopian National Dairy Development Strategy 2022–2031”
The CGIAR Initiative on National Policy and Strategies (NPS)
Role of Policy Research in the Recovery ProcessESSP1
This document summarizes the role of policy research in Ethiopia's recovery process from various crises. It outlines how policy research can identify and measure the direct and indirect costs of conflicts through data collection, counterfactual modeling, and impact simulations. It finds that conflicts led to rises in government spending and reductions in GDP, consumption, incomes, and increased poverty and inequality. Going forward, policy research can assess recovery options and address knowledge gaps around the psychosocial impacts of conflicts and their root causes. Understanding these issues is important for guiding effective policy responses and building resilience against future shocks.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
A toxic combination of 15 years of low growth, and four decades of high inequality, has left Britain poorer and falling behind its peers. Productivity growth is weak and public investment is low, while wages today are no higher than they were before the financial crisis. Britain needs a new economic strategy to lift itself out of stagnation.
Scotland is in many ways a microcosm of this challenge. It has become a hub for creative industries, is home to several world-class universities and a thriving community of businesses – strengths that need to be harness and leveraged. But it also has high levels of deprivation, with homelessness reaching a record high and nearly half a million people living in very deep poverty last year. Scotland won’t be truly thriving unless it finds ways to ensure that all its inhabitants benefit from growth and investment. This is the central challenge facing policy makers both in Holyrood and Westminster.
What should a new national economic strategy for Scotland include? What would the pursuit of stronger economic growth mean for local, national and UK-wide policy makers? How will economic change affect the jobs we do, the places we live and the businesses we work for? And what are the prospects for cities like Glasgow, and nations like Scotland, in rising to these challenges?
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
University of North Carolina at Charlotte degree offer diploma Transcripttscdzuip
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3. Economywide analysis
• Several methods available to ex ante evaluate impact of policies and external shocks
to economies.
• For instance;
• Partial equilibrium frameworks focus on a few sectors (e.g., a single or multi- market/farm
models/agriculture sector) with strong ceteris paribus assumptions.
• Lack of coverage of economywide linkages – sectors/markets are interdependent.
• What is economywide analysis?
• Analysis frameworks that considers the whole economy.
• Markets and economic agents are interconnected, i.e., transact, interact, and respond to market signals.
• E.g., Computable General Equilibrium(CGE) models
• Reflects a country’s economic structure and linkages.(Theoretically grounded-see Theory of General Equilibrium-
neoclassical economics)
4. Economywide analysis cont.
• Captures the interactions between different decision-making agents in a market-
based economy.
• When does economywide analysis warrant?
• When linkages or size effects are significant enough to warrant a whole economy’s perspective.
• Examples?
(i) Government doubles import tariffs on selected commodities
(ii) A widespread drought causes the maize crop to fail
(iii) High fuel, fertilizer and commodity prices – War in Ukraine affecting global prices
• To understand these linkages, let us consider the circular flow of income in the
economy
• Circular flow of income is the underlying concept behind SAMs.
5. Circular flow of income
Factor
Markets
Households
Firms
Product/com
Markets Private
consumption
Intermediate
demand
Sales
Wages
& rents
Intermediate
demand
Sales
Factor
costs
Social transfers
Savings &
Investment
Government
Public
consumption
Investment
demand
Domestic private savings
Public savings
Direct taxes
Indirect taxes
Exports
Foreign
Markets
Imports
Foreign savings or capital inflows
GDP (market prices) =
C + I + G + X – M
C G I
X M
GDP (factor cost) = F
GDP (market prices) = F + T
T
F
Investment I = Savings S
S
S
S
6. Economywide analysis in summary should….
• Capture economic linkages
• Comprehensive: all income and expenditure flows between all actors (e.g., households, government & ROW)
• Adhere to economywide or macroeconomic consistency requirements(“no free lunch”)
• Incomes to one are spendings to others
• Accounts in SAMs
• Government (revenues, expenditure)
• Savings-investment
• Current account (foreign exchange)
• Factor markets (intensity of factors)
• And (ideally) account for competition for resources – expanding sector
• Factor markets (land, labor, capital) – relative prices
• Product markets (supply, demand, import, export)
• Economic structure influences how economic agents respond to market signals.
• E.g. Dependence on domestic or imports for inputs and consumption – the impact of demand expansion would differ.
• E.g. Share of value added/intermediate inputs in gross output – VA would create further demand.
• SAMs are starting point of economywide models – databased for economywide analysis.
7. What is a Social Accounting Matrix (SAM)?
• SAMs are (national) accounting frameworks or databases
• Capture the circular flow of receipts
and payments between agents and
markets during a given year
• The importance of a ‘normal’ year
• Include all sectors, factors,
households, government and the rest of the world
• Every payment becomes someone else’s income (i.e., consistent double-entry accounting)
• How are transactions captured in a SAM?
• Square matrix
• Payments (in columns) and receipts (in rows)
8. ACT COM FAC HHD GOV INV ROW TOT
ACT
Marketed
output
Activity
incomes
COM
Intermediate
demand
Private
consumption
Public
consumption
Investment
demand
Exports Total demand
FAC Value added
Factors
incomes
HHD
Income
distribution
Social
transfers
Remittances
Household
incomes
GOV
Producer
taxes
Tariffs, VAT &
excise taxes
Direct taxes Foreign aid
Government
revenues
SAV
Private
savings
Public savings
Foreign
savings
Total savings
ROW Imports
Repatriated
profits
Debt
repayments
Foreign
payments
TOT Gross output Total supply
Factor
payments
Household
expenditures
Government
expenditures
Total
investment
Foreign
receipts
SAM structure
Payments
Receipts
9. SAM in summary
• The impacts of policy reforms, spending, and investments are influenced by:
The initial structures of institutions (households, enterprises, the government, and the
rest of the world);
• E.g.: Impact import price of wheat on rural vs urban households
The input–output relationships across sectors; and
The factor and product market linkages between consumers and producers.
• Supply responses; consumers dependance on local products
• All these structures and linkages are captured in SAMs
• Also, most parameter/variables for CGE models are drawn from SAMs.
• Production and consumption elasticities from elsewhere
• Quality of SAM data greatly influences the empirical strength of CGE analysis.
• Are we using data that resembles the economy?
10. ACT COM FAC HHD GOV INV ROW TOT
ACT
Marketed
output
Activity
incomes
COM
Intermediate
demand
Private
consumption
Public
consumption
Investment
demand
Exports Total demand
FAC Value added
Factors
incomes
HHD
Income
distribution
Social
transfers
Remittances
Household
incomes
GOV
Producer
taxes
Tariffs, VAT &
excise taxes
Direct taxes Foreign aid
Government
revenues
SAV
Private
savings
Public savings
Foreign
savings
Total savings
ROW Imports
Repatriated
profits
Debt
repayments
Foreign
payments
TOT Gross output Total supply
Factor
payments
Household
expenditures
Government
expenditures
Total
investment
Foreign
receipts
SAM structure
Value-added or GDP at factor cost
Sum of payments from activities to
factors
When disaggregated it tells about the
relative factor intensities in different
sectors.
Intermediate demand
Goods and services used in production.
When disaggregated we can analyze
differences in production technologies
Compare to value added to calculate ratio
of factor to non-factor input spending
11. ACT COM FAC HHD GOV INV ROW TOT
ACT
Marketed
output
Activity
incomes
COM
Intermediate
demand
Private
consumption
Public
consumption
Investment
demand
Exports Total demand
FAC Value added
Factors
incomes
HHD
Income
distribution
Social
transfers
Remittances
Household
incomes
GOV
Producer
taxes
Tariffs, VAT &
excise taxes
Direct taxes Foreign aid
Government
revenues
SAV
Private
savings
Public savings
Foreign
savings
Total savings
ROW Imports
Repatriated
profits
Debt
repayments
Foreign
payments
TOT Gross output Total supply
Factor
payments
Household
expenditures
Government
expenditures
Total
investment
Foreign
receipts
SAM structure
Factor income distribution
Factor incomes paid to
households (and other
domestic institutions) or foreign
institutions (repatriated profits)
When disaggregated these
accounts can tell us more about
the distribution of household
income
12. ACT COM FAC HHD GOV INV ROW TOT
ACT
Marketed
output
Activity
incomes
COM
Intermediate
demand
Private
consumption
Public
consumption
Investment
demand
Exports Total demand
FAC Value added
Factors
incomes
HHD
Income
distribution
Social
transfers
Remittances
Household
incomes
GOV
Producer
taxes
Tariffs, VAT &
excise taxes
Direct taxes Foreign aid
Government
revenues
SAV
Private
savings
Public savings
Foreign
savings
Total savings
ROW Imports
Repatriated
profits
Debt
repayments
Foreign
payments
TOT Gross output Total supply
Factor
payments
Household
expenditures
Government
expenditures
Total
investment
Foreign
receipts
SAM structure
Private (household) consumption
Regular consumption expenditure.
When disaggregated by commodities
and household types, we can analyze
differences in consumption patterns
of different types of households (e.g.,
Engel’s Law)
What about own consumption?
Government recurrent spending
Government spending on goods and
services to maintain government
function.
Investment demand
Private and public gross capital
formation; spending is typically on
commodities such as cement and
construction services.
13. ACT COM FAC HHD GOV INV ROW TOT
ACT
Marketed
output
Activity
incomes
COM
Intermediate
demand
Private
consumption
Public
consumption
Investment
demand
Exports Total demand
FAC Value added
Factors
incomes
HHD
Income
distribution
Social
transfers
Remittances
Household
incomes
GOV
Producer
taxes
Tariffs, VAT &
excise taxes
Direct taxes Foreign aid
Government
revenues
SAV
Private
savings
Public savings
Foreign
savings
Total savings
ROW Imports
Repatriated
profits
Debt
repayments
Foreign
payments
TOT Gross output Total supply
Factor
payments
Household
expenditures
Government
expenditures
Total
investment
Foreign
receipts
SAM structure
Foreign trade
Export earnings and import
payments; commodity
disaggregation allows analysis
of specific trade patterns.
Which cell captures which?
14. ACT COM FAC HHD GOV INV ROW TOT
ACT
Marketed
output
Activity
incomes
COM
Intermediate
demand
Private
consumption
Public
consumption
Investment
demand
Exports Total demand
FAC Value added
Factors
incomes
HHD
Income
distribution
Social
transfers
Remittances
Household
incomes
GOV
Producer
taxes
Tariffs, VAT &
excise taxes
Direct taxes Foreign aid
Government
revenues
SAV
Private
savings
Public savings
Foreign
savings
Total savings
ROW Imports
Repatriated
profits
Debt
repayments
Foreign
payments
TOT Gross output Total supply
Factor
payments
Household
expenditures
Government
expenditures
Total
investment
Foreign
receipts
SAM structure
Government taxes
Indirect tax revenue: sales
tax and import duties
(lumped together here);
commodity disaggregation
would allow us to estimate
average tax rates by
commodity
Government taxes
Direct tax revenue: personal
income tax and corporate
profit tax
15. ACT COM FAC HHD GOV INV ROW TOT
ACT
Marketed
output
Activity
incomes
COM
Intermediate
demand
Private
consumption
Public
consumption
Investment
demand
Exports Total demand
FAC Value added
Factors
incomes
HHD
Income
distribution
Social
transfers
Remittances
Household
incomes
GOV
Producer
taxes
Tariffs, VAT &
excise taxes
Direct taxes Foreign aid
Government
revenues
SAV
Private
savings
Public savings
Foreign
savings
Total savings
ROW Imports
Repatriated
profits
Debt
repayments
Foreign
payments
TOT Gross output Total supply
Factor
payments
Household
expenditures
Government
expenditures
Total
investment
Foreign
receipts
SAM structure
Remittances and social transfers
Households can receive transfers
from government (e.g. pension or
social cash transfers), or
remit/receive transfers to/from
other domestic households or
to/from the rest of the world.
What does the latter entail?
16. ACT COM FAC HHD GOV INV ROW TOT
ACT
Marketed
output
Activity
incomes
COM
Intermediate
demand
Private
consumption
Public
consumption
Investment
demand
Exports Total demand
FAC Value added
Factors
incomes
HHD
Income
distribution
Social
transfers
Remittances
Household
incomes
GOV
Producer
taxes
Tariffs, VAT &
excise taxes
Direct taxes Foreign aid
Government
revenues
SAV
Private
savings
Public savings
Foreign
savings
Total savings
ROW Imports
Repatriated
profits
Debt
repayments
Foreign
payments
TOT Gross output Total supply
Factor
payments
Household
expenditures
Government
expenditures
Total
investment
Foreign
receipts
SAM structure
Grants, loans, and interest
on foreign debt
Transactions between
government and the rest of
the world.
What does the transaction
from government to the rest
of the world represent?
17. ACT COM FAC HHD GOV INV ROW TOT
ACT
Marketed
output
Activity
incomes
COM
Intermediate
demand
Private
consumption
Public
consumption
Investment
demand
Exports Total demand
FAC Value added
Factors
incomes
HHD
Income
distribution
Social
transfers
Remittances
Household
incomes
GOV
Producer
taxes
Tariffs, VAT &
excise taxes
Direct taxes Foreign aid
Government
revenues
SAV
Private
savings
Public savings
Foreign
savings
Total savings
ROW Imports
Repatriated
profits
Debt
repayments
Foreign
payments
TOT Gross output Total supply
Factor
payments
Household
expenditures
Government
expenditures
Total
investment
Foreign
receipts
SAM structure
Domestic and foreign savings
Households, government, and
the rest of the world all “save”.
What are savings used for?
18. SAM Structure
ACT COM FAC HHD GOV INV ROW TOT
ACT
Marketed
output
Activity
incomes
COM
Intermediate
demand
Private
consumption
Public
consumption
Investment
demand
Exports
Total
demand
FAC Value added
Factors
incomes
HHD
Income
distribution
Social
transfers
Remittances
Household
incomes
GOV
Producer
taxes
Tariffs, VAT &
excise taxes
Direct taxes Foreign aid
Government
revenues
SAV
Private
savings
Public
savings
Foreign
savings
Total savings
ROW Imports
Repatriated
profits
Debt
repayments
Foreign
payments
TOT Gross output Total supply
Factor
payments
Household
expenditures
Government
expenditures
Total
investment
Foreign
receipts
C G I
T
VA
GDP at factor cost
GDPfc = VA
GDPmp = GDPfc + T
Gross domestic product at
market prices
GDP = C + I + G + (X – M)
= domestic absorption
+ trade balance
X
M
19. Compilation and interpretation of a SAM
• The information needed to build a SAM comes from a variety of sources.
• Supply and Use Tables (SUTs) – input structure, source of demand, source of supply
• National accounts (sectoral production, exp and income),
• Household surveys (cons spending, and income), LFS
• Government financial statistics (rev and exp), and
• Balance of payments from NBE.
• Placing these data within the SAM framework almost always generates
inconsistencies –proto-SAMs.
• Disaggregation – depend on the purpose of the SAM and structure of the economy
• Data from different sources, inconsistencies in data across sources
• A number of statistical estimation techniques exist to balance SAM accounts.
• Cross-entropy estimation is frequently used method.
• Using cell and total controls when data is reliable.
• Allows for pre-specified degree of variation when uncertain.
20. Building a Macro-SAM→ Exercise 1 (Task 1)
Complete “Task 1 Worksheet.xls” in the
“Exercises” folder. The solution file is in the
“Solutions” sub-folder.
A brief look at the
Ethiopian micro-
SAM
Task 1:
Constructing a Macro-SAM for Ghana
• As part of this training, we designed a number of Microsoft Excel-based exercises.
• All exercises are based on the 2007 training SAM for Ghana.
• After finishing the exercises/tasks, you can check your answer by looking at the
solution worksheets.
• The exercises at hand help study the structure of a SAM and the data required to
build this database.
21. • Activity: Build an aggregate macro-SAM using 2007 data from Ghana
• Outcome: Familiar with a structure of a basic SAM and how to build one.
• Key data needed:
• National accounts (GDP at factor cost)
• National accounts (GDP at market price)
• Government financial statistics (revenue and spending)
• Balance of payments
• Extra task: Discuss each entry of the macro-SAM
• Value added—GDP at factor cost
• Intermediate demand
• Factor income distribution (share of labor and capital)
• Private consumption
• Government spending (recurrent and investment demand)
• Foreign trade – determine net importer or not
• Gov’t taxes
22. 2015 Rwanda SAM (in billions of RWF) –output of task 1.
Activit’s
C1
Comd’s
C2
Factors Househ’d
C4
Gover’t
C5
Invest’t
C6
Rest of
World
C7
Total
C3-1 C3-2
Activities
R1
24,996 24,996
CommoditiesR
2
12,029 12,142 1,805 4,680 5,151 35,807
Factors
Labor
R3-1
9,717 9,717
Capital
R3-2
3,250 3,250
Households
R4
9,717 3,250 1,387 2,001 16,354
Government
R5
2,372 940 739 4,052
Savings
R6
3,272 860 548 4,680
Rest of World
R7
8,439 8,439
Total 24,996 35,807 9,717 3,250 16,354 4,052 4,680 8,439
23. Macro-SAMs and National Accounts
• A “macro” SAM is an extension of the basic national income identities as follows:
• Y = C + G + I + X-M (GDP by Expenditure)
• C + T + SH = Y (Household income)
• G + SG = T (Government budget)
• I = SH + SG + SROW (Savings-investment)
• X + SROW = M (Trade balance)
24. • We have so far saw and worked on the macro-SAM
• We will now build a slightly disaggregated micro-SAM
• Where can further data come from to further disaggregate the macro-SAM?
• SUT (on supply and use of commodities)
• Agricultural surveys (on production and utilization)
• Labor force surveys
• Household and enterprise surveys (on income and expenditure patterns)
• Balance of payments data
25. A micro-SAM
Value added
Intermediate demand
Marketed output
Own
consumption
Domestic
absorption
Imports
Imports
Household income sources &
income distribution
26. Interpreting SAM values → Exercise 2 (Task 2)
Complete “Task 2 Worksheet.xls” in the
“Exercises” folder. The solution file is in the
“Solutions” sub-folder.
Task 2:
Interpreting the micro-SAM
• Activity: Calculate and interpret various indicators of the Rwanda’s
economic structure
• Output shares,
• Trade shares,
• Demand shares,
• Household income and expenditure shares, and
• Macroeconomic indicators
28. • SAMs and SAM-based models are useful
when economic linkages and spillover effects
matter
• But many developing countries don’t have SAMs or they are outdated
• Even when SAMs exist, they may not be suitable
• Limited information on sectors of interest (e.g., agriculture and processing)
• Inappropriate household classification (farm/nonfarm, rural/urban)
• Not necessarily comparable across countries
• Solution is a toolkit for building standardized SAMs that adhere to common data standards
and have a detailed structure with a wide range of applications
Nexus SAM Toolkit reconciles data from multiple sources
• Core toolkit tailored to national statistical reports
• Final data reconciliation uses cross-entropy estimation
• Coded in Microsoft Excel® and GAMS®
Nexus SAM-building toolkit
29. Maize | Sorghum + millet | Rice | Wheat + barley | Other cereals | Pulses | Groundnuts | Other oilseeds | Cassava | Irish
potatoes | Sweet potatoes | Other roots | Leafy vegetables | Other vegetables | Sugarcane | Tobacco | Cotton + fibers | Nuts
| Bananas + plantains | Other fruits | Tea | Coffee | Cocoa | Cut flowers | Rubber | Other crops | Cattle | Raw milk | Poultry |
Eggs | Sheep + goats | Other livestock | Forestry | Aquaculture | Capture fisheries
Nexus 86 sector SAM structure
Agricultural Sectors & Products
Coal | Crude oil | Natural gas | Other mining | Meat | Fish + seafood | Dairy | Fruits + vegetables | Fats + oils | Maize milling |
Sorghum + millet milling | Rice milling | Wheat + barley milling | Other grain milling | Sugar refining | Coffee processing | Tea
processing | Other foods | Animal feed | Beverages | Tobacco | Cotton yarn | Textiles | Clothing | Leather + footwear | Wood
| Paper | Petroleum | Chemicals | Non-metal minerals | Metals + metal products | Machinery | Equipment | Vehicles | Other
manufacturing | Electricity + gas | Water supply + sewage | Construction
Industrial Sectors & Products
Wholesale + retail trade | Transportation + storage | Accommodation | Food services | Information + communication |
Finance + insurance | Real estate activities | Business services | Public administration | Education | Health + social work |
Other services
Service Sectors & Products
35
39
12
Crop land | Crop, livestock, mining and nonagricultural capital | Rural and urban labor by education category
Factors of Production
Rural farm and nonfarm households and urban households by national per capita expenditure quintiles
Household groups
13
15
30. Macro data
National accounts (SNA 2008)
Balance of payments (IMF BOP6)
Gov. finance (IMF GFSM2014)
Micro data
Agriculture production (FAOSTAT)
Industrial + economic surveys
Energy balance (IEA)
Trade flows (COMTRADE)
Tariffs (TRAINS)
Labor force surveys
Household surveys (LSMS)
Input-output table
Rebased national accounts
Agriculture censuses + surveys
Industrial firm surveys
SAM Data Sources & Nexus Toolkit
Nexus SAM Toolkit reconciles data from multiple sources
• Core toolkit tailored to national statistical reports
• Final data reconciliation uses cross-entropy estimation
• Coded in Microsoft Excel® and GAMS®
31. Nexus SAM Building Process
Step 1: Macro SAM
Single aggregate activity, commodity,
labor and household accounts
Step 2: Supply-Use Table
Disaggregate and balance activity and
commodity accounts
Extension: Regional disaggregation
Split activity, factors, and household
accounts
Step 3: Income Distribution
Disaggregate and balance labor and
household accounts
33. Multiplier Model: Standard SAM
Activities Commodities Factors
House-
holds
Exog.
demand
Total
A1 A2 C1 C2 F H E
A1 X1 X1
A2 X2 X2
C1 Z11 Z12 C1 E1 Z1
C2 Z21 Z22 C2 E2 Z2
F V1 V2 V
H V1 + V2 Y
E L1 L2 S E
X1 X2 Z1 Z2 V Y E
X Gross output of each activity (X1 and X2)
Z Total demand for each commodity (Z1 and Z2)
V Total factor income
Y Total household income
E Exogenous demand for each commodity (GOV, INV, EXP)
34. Multiplier Model: Coefficient matrix
Activities Commodities Factors
House-
holds
Exog.
demand
Total
A1 A2 C1 C2 F H E
A1 b1= X1/Z1 X1
A2 b2= X2/Z2 X2
C1 a11=Z11/X1 a12=Z12/X2 c1 = C1/Y E1 Z1
C2 a21=Z21/X1 a22=Z22/X2 c2 = C2/Y E2 Z2
F v1=V1/X1 v2=V2/X2 V
H 1 Y
E l1 = L1/Z1 l2 = L2/Z2 s = S/Y E
X1 X2 Z1 Z2 V Y E
a Technical coefficients (intermediate input shares)
b Share of domestic output in total demand
v Share of value-added (factor income) in gross output
l Share of the value of total demand from imports or commodity taxes
c Household consumption expenditure shares
s Household savings rate (i.e., savings as a share of household income)
35. Activities Commodities Factors
House-
holds
Exog.
demand
Total
A1 A2 C1 C2 F H E
A1 b1= X1/Z1 X1
A2 b2= X2/Z2 X2
C1 a11=Z11/X1 a12=Z12/X2 c1 = C1/Y E1 Z1
C2 a21=Z21/X1 a22=Z22/X2 c2 = C2/Y E2 Z2
F v1=V1/X1 v2=V2/X2 V
H 1 Y
E l1 = L1/Z1 l2 = L2/Z2 s = S/Y E
X1 X2 Z1 Z2 V Y E
Multiplier Model: Coefficient matrix
Domestic production
𝑋1 = 𝑏1𝑍1 𝑋2 = 𝑏2𝑍2
𝑌 = 𝑣1𝑋1 + 𝑣2𝑋2
= 𝑣1𝑏1𝑍1 + 𝑣2𝑏2𝑍2
Household income
Substitute X’s and Y’s
𝑍1 = 𝑎11𝑋1 + 𝑎12𝑋2 + 𝑐1𝑌 + 𝐸1
𝑍2 = 𝑎21𝑋1 + 𝑎22𝑋2 + 𝑐2𝑌 + 𝐸2
Demand equations
36. Multiplier Model: Coefficient matrix
1 − 𝑎11𝑏1 − 𝑐1𝑣1𝑏1 𝑍1 + −𝑎12𝑏2 − 𝑐1𝑣2𝑏2 𝑍2 = 𝐸1
Simplify and reorganize with E on the right-hand side
−𝑎21𝑏1 − 𝑐2𝑣1𝑏1 𝑍1 + 1 − 𝑎22𝑏2 − 𝑐2𝑣2𝑏2 𝑍2 = 𝐸2
1 − 𝑎11𝑏1 − 𝑐1𝑣1𝑏1 −𝑎12𝑏2 − 𝑐1𝑣2𝑏2
−𝑎21𝑏1 − 𝑐2𝑣1𝑏1 1 − 𝑎22𝑏2 − 𝑐2𝑣2𝑏2
𝑍1
𝑍2
=
𝐸1
𝐸2
In matrix format
𝐼 − 𝑀 𝑍 = 𝐸
or
∆𝑍 = (𝐼 − 𝑀)−1
× ∆𝐸
Change in
exogenous demand
(simulation shock)
Change in total
demand
(simulation result)
Multiplier matrix: identity matrix minus
coefficient matrix