Exam 10: Classical Business Cycle Analysis

Romer and Romer found evidence that money is not neutral because

According to classical economists,in recessions,not only does the unemployment rate increase,so does the

Given data on capital (K),labor (N),and output (Y),and estimates of capital's share of output (a),the Solow residual is measured as

Suppose the money demand of individuals and firms depends on what they perceive to be the probabilities that the economy will expand or contract over the following six months.Suppose their money demand is given by the equation L = 0.5Y - 100i + 20z,where z is the probability that the economy is expanding six months in the future.If z = 1,the economy will certainly be in recovery,if z = 0,the economy will certainly be in recession,and for z between 0 and 1 there is some uncertainty about the future state of the economy.Use a classical (RBC)model of the economy.If the Fed moves the money supply to target the price level,how does the money supply relate to the expected future state of the economy? Is this an example of reverse causation?

Classical economists think that the government ________ use fiscal policy to dampen the business cycle because prices and wages adjust ________.

People increase their labor supply in response to a temporary increase in government purchases because

According to the real business cycle theory,what is the principal cause of business cycle fluctuations?

According to real business cycle theory,which of the following events is least likely to cause a recession?

According to classical economists,the government should increase government purchases when

Classical economists believe that

How do RBC economists face the business cycle fact that inflation is procyclical?

People ________ their labor supply in response to a temporary decrease in government purchases because

You are likely to think that the relative price of your good has risen and you should increase your output if you expected

Measures of the Solow residual show it to be

Prescott's calibrated RBC model showed that the actual and simulated ________ of five key macroeconomic variables were very close.

Because employment actually continued to fall at the beginning of the recoveries that began in 1991,2001,and 2009,these recoveries have come to be known as

When RBC economists compare the correlations in their models to the data,what are they looking at?

The misperceptions theory was originally proposed by ________ and rigorously formulated by ________.

What do RBC economists mean by the term calibration?

In the classical model,a temporary decrease in government spending would cause a decrease in