Exam 17: New Classical Macro and New Keynesian Macro

In the RBC model,supply shocks

The assumption of imperfect information is critical to

Which of the following is a New Keynesian explanation of wage and price stickiness must be discounted?

A favorable supply shock shifts the production function curve ________ and the labor demand curve ________.

Evidence from the United States and Japan on "multifactor productivity" shows it to be highly ________,which is ________ with the RBC theory of technological shocks and their consequences for the business cycle.

Gordon suggests that full indexation of production costs to nominal AD would solve the macroeconomic externality.However,individual firms would be unlikely to extend full indexation to their workers because

In 1989,Sears and Roebuck closed its stores and remarked every price in its stores to reflect a new "lower everyday" pricing strategy.Sears must have believed at that time that

Information on money growth is available to the public with ________ lags,causing difficulty for the ________ of the New Classical approach.

The basic RBC model predicts ________ movements in the price level,which in fact occur ________ in the U.S.economy.

In the fooling model's labor market diagram,from an initial intersection point of the labor supply and demand curves,tracing "northeast" up the labor supply curve shows

According to the original Keynesian model,there would be counter-cyclical movements of the real wage rate in response to changes in aggregate demand because

According to the Keynesian model,real wages should

One fundamental difference between New Classical and the New Keynesian macroeconomics is that the New Keynesians model firms as ________ competitive price ________.

Figure 17-3 -In Figure 17-3 above,suppose we are working under the assumption of the Lucas model.Suddenly,monetary policy becomes more expansionary and every firm believes that the higher prices bid on their product is not being enjoyed by any other firm.We would picture this as a movement between points

A central concept of New Keynesian macroeconomics is that in setting prices and wages,self-interested firms and workers are acting

Higher consumer prices caused by external forces would boost the wage costs of firms without any commensurate increase in the nominal demand for their products if

Which explanation for persistent unemployment used by the original Keynesian model is no longer needed in the new Keynesian model?

The flaw of the Classical model of the business cycle is that it

According to the Real Business Cycle model real wages should

Under the assumptions of the new Keynesian model,an increase in aggregate demand will