EBK MACROECONOMICS
21st Edition
ISBN: 8220103959902
Author: McConnell
Publisher: YUZU
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Textbook Question
Chapter 6, Problem 1DQ
Why do you think macroeconomists focus on just a few key statistics when trying to understand the health and trajectory of an economy? Would it be better to try to examine all possible data?
Expert Solution & Answer
To determine
Macroeconomic model.
Explanation of Solution
Macroeconomists focus on a three key statistics of unemployment, real GDP and inflation and it is difficult to procedure all the information in every goods and services in each market or in the economy. Economists can gain some insight into the health of the economy by using these three key measures as mentioned earlier.
Economics Concept Introduction
Concept introduction:
Macroeconomics: Macroeconomics refers to the behaviour of the entire economy that is; it studies about the economy as a whole which includes general price level, general employment, aggregate demand, aggregate supply, general wage rate, etc.
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Students have asked these similar questions
Problem 1
The Core Model
Suppose you are interested in studying the effect of workers' training (measured by the
number of training hours) on employee productivity (measured by output per hour).
a. What is the dependent and independent variable in this setting? (2 points)
b. How would you write this relationship using the Core Model? (3 points)
C.
Do you expect the slope coefficient ẞ₁, (which shows relation between teacher's
experience and test scores) to be positive or negative? Explain your reasoning. (5
points)
d. Name any two factors that are likely included in the error term of your model? (5
points)
Problem 2
Endogeneity
Suppose you are interested in how social media usage affects students' academic
performance. Consider the following model:
GPA; = ßo + ß₁Social Media Hours; + ɛ;
where GPA, is the grade point average of a student and Social Media Hours; measures
how many hours the student spends on social media every week. Each student is denoted by
the subscript i.
a.
What is the dependent variable Y in this setting? What is the independent variable X
in this setting? (4 points)
b. What does Bo
C. What does ẞ1
= 3 mean? (2 points)
= 0.2 mean? (3 points)
d. What is the condition for the independent variable Social Media Hours; to be
endogenous? (5 points)
e. Is the independent variable likely to be endogenous? Why or why not? (3 points)
f. If yes, describe a scenario where the independent variable is endogenous. (3 points)
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