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    ricardo medina
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    Simple national economic models are based on variables like gross national product, total consumption, total investments, and government expenses. These variables are related by the definition that gross national product equals total consumption plus total investments plus government expenses. Different economic schools have proposed simplified relationships between these variables, with this example focusing on a simple Keynesian multiplier-accelerator model proposed by P. Samuelsson that makes assumptions about economic mechanisms.

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    Simple national economic models are based on variables like gross national product, total consumption, total investments, and government expenses. These variables are related by the definition that gross national product equals total consumption plus total investments plus government expenses. Different economic schools have proposed simplified relationships between these variables, with this example focusing on a simple Keynesian multiplier-accelerator model proposed by P. Samuelsson that makes assumptions about economic mechanisms.

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    20 views4 pages

    Economic Model

    Uploaded by

    ricardo medina
    Simple national economic models are based on variables like gross national product, total consumption, total investments, and government expenses. These variables are related by the definition that gross national product equals total consumption plus total investments plus government expenses. Different economic schools have proposed simplified relationships between these variables, with this example focusing on a simple Keynesian multiplier-accelerator model proposed by P. Samuelsson that makes assumptions about economic mechanisms.

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    of 4

    2.

    4 AN EOONOMIO SYSTEM 29

    2.4 An Economic System

    Simple national economic models are based on the following funda­


    mental variables:
    y(t): the gross national product (GNP), year t
    e(t): the total consumption, year t

    i(t): the total investments, year t


    g(t): the expenses of the government, year t
    By definition,
    y(t) = c(t) + i(t) + g(t) (2.9)
    There are obviously other relationships among these four variables. In
    reality these are certainly complicated, and sorne "exact" relationships
    of the laws of nature type are missing.
    Different economic schools have assigned different simplified rela­
    tionships. In this example we will study a simple Keynesian model,
    the multiplier-accelerator model according to P. Samuelsson. The fol­
    lowing assumptions are then made regarding economic mechanisms:

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