Answer to Question #55406 in Macroeconomics for Idowu

Question

1. Which of the macroeconomic models is much more suitable than any other to test for whether technological progress has taken place or not?
2. In a computable general equilibrium model, base year price is .............
3. At a given level of capital per head or labour, an improvement in technology will result in ...............
4. Give the three basic uses of macro econometric models.

Answer 1

1. Such macroeconomic models as PPF - production possibility frontier are much more suitable than any other to test for whether technological progress has taken place or not.
2. In a computable general equilibrium model, base year price is P0.
3. At a given level of capital per head or labour, an improvement in technology will result in the shift of the PPF (production possibility frontier).
4. Macroroeconomics models may be used to clarify and illustrate basic theoretical principles; they may be used to test, compare, and quantify different macroeconomic theories; they may be used to produce "what if" scenarios (usually to predict the effects of changes in monetary,fiscal, or other macroeconomic policies); and they may be used to generate economic forecasts.