Exam 13: Business Cycle Models with Flexible Prices and Wages

If, in the coordination failure model, the nominal money supply acts as a sunspot variable, then it is likely that the nominal money supply would

Increasing returns to scale refers to

Shocks to total factor productivity are least plausible as an explanation of the recession of

The Keynesian view implies that there is a role for monetary and fiscal policy in stabilizing the economy in response to aggregate shocks because

In the real business cycle model, a persistent increase in total factor productivity

In the coordination failure model

In the coordination failure, the most likely explanation of business cycles are

Extraneous events that are completely unrelated to economic fundamentals are called

Fiscal policy can stabilize output in the coordination failure model by

The phenomenon of underutilization of labour during a recession is called

One potential weakness of the coordination failure model as an explanation of business cycles is that

Measurement errors of changes in the Solow residual during recessions are most likely caused by

Shocks to total factor productivity are most plausible as an explanation of the recession of

Macroeconomists were criticized after the 2008-2009 recession by

The basic real business cycle model has some difficulty explaining why

Strategic complementarities may help explain business cycles because such complementarities may lead to

In the coordination failure model,

For the coordination failure model to work, it must be the case that the aggregate labour demand curve must be

Endogenous money is where the money supply is not determined by the monetary authority, but

The coordination failure model is based on the possibility of increasing returns to scale