Question 1

If there are total factor productivity shocks in the New Keynesian model, and the central bank always reduces the output gap to zero

Accepted Answer

A) the New Keynesian model will produce the same data as the real business cycle model only if the central bank pegs the price level in the real business cycle model. 
B) the New Keynesian model will produce the same data as the real business cycle model. 
C) average labour productivity is countercyclical. 
D) employment is constant. 
E) employment is countercyclical. 
A) the New Keynesian model will produce the same data as the real business cycle model only if the central bank pegs the price level in the real business cycle model. 
B) the New Keynesian model will produce the same data as the real business cycle model. 
C) average labour productivity is countercyclical. 
D) employment is constant. 
E) employment is countercyclical.

Question 2

According to real business cycle theorists, an increase in total factor productivity could lead to an increase in the nominal money supply due to

Accepted Answer

A) the cyclical behaviour of tax collections and attempts by the Bank of Canada to stabilize real output. 
B) Bank of Canada attempts to stabilize the price level and banking sector expansion of deposit money. 
C) Bank of Canada attempts to stabilize real output and the price level. 
D) Bank of Canada attempts to stabilize business cycle fluctuations. 
E) banking sector expansion of deposit money and the cyclical behaviour of tax collections. 
A) the cyclical behaviour of tax collections and attempts by the Bank of Canada to stabilize real output. 
B) Bank of Canada attempts to stabilize the price level and banking sector expansion of deposit money. 
C) Bank of Canada attempts to stabilize real output and the price level. 
D) Bank of Canada attempts to stabilize business cycle fluctuations. 
E) banking sector expansion of deposit money and the cyclical behaviour of tax collections.

Question 3

Explain what the policy implications of the real business cycle model are. Do you think the real business cycle
model leaves out important features of the economy, which causes its policy conclusions to be questionable?
Discuss.

Accepted Answer

The basic real business cycle model impl

If there are total factor productivity shocks in the New Keynesian model, and the central bank always reduces the output gap to zero

According to real business cycle theorists, an increase in total factor productivity could lead to an increase in the nominal money supply due to

Explain what the policy implications of the real business cycle model are. Do you think the real business cycle model leaves out important features of the economy, which causes its policy conclusions to be questionable? Discuss.

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters

Exam 13: Business Cycle Models With Flexible Prices and Wages

If there are total factor productivity shocks in the New Keynesian model, and the central bank always reduces the output gap to zero

According to real business cycle theorists, an increase in total factor productivity could lead to an increase in the nominal money supply due to

Explain what the policy implications of the real business cycle model are. Do you think the real business cycle model leaves out important features of the economy, which causes its policy conclusions to be questionable? Discuss.

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters