Exam 13: Business Cycle Models With Flexible Prices and Wages

In the New Keynesian model, the central bank's policy target is

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

Negative nominal interest rates work because

Procyclical total factor productivity (TFP)could be caused by

The real business cycle model replicates the key business cycle regularities

In the New Keynesian sticky wage model, an increase in the money supply

The behaviour of the Solow residual suggests that when current total factor productivity increases

In the New Keynesian model, an increase in current government spending shifts

In the New Keynesian model, an increase in current government spending

In the New Keynesian model, the output demand curve represents combinations of

A classical objection to Keynesian sticky price models is that

Changes in the money supply in the New Keynesian model is NOT a likely explanation of the typical business cycle, because the model counterfactually predicts that

Comovement between nominal and real variables

Most central banks, including the Bank of Canada

The main difference between the New Keynesian model and the basic monetary intertemporal model is that in the New Keynesian model

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

A key criticism of New Keynesian models is

In the New Keynesian model, an increase in the money supply

Two business cycle facts that are less easily explained by the real business cycle are that

The argument that the nominal wage is fixed because of long-term labour contracts