Exam 10: Classical Business Cycle Analysis

If you expect a general price increase of 5% this year and the price of the hamburgers you sell increases by 10%,you would conclude that the relative price of your good has

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

According to the misperceptions theory,when the price level falls below the expected price level

In the classical IS-LM/AD-AS model,a beneficial productivity shock would ________ output,________ the real interest rate,and ________ the price level.

According to the misperceptions theory,when the aggregate price level is higher than expected,

One important reason why the Solow residual may be strongly procyclical even if the actual technology used in production doesn't change is that

According to classical economists,the increase in unemployment in recessions is caused by

Reverse causation is the idea that

The formula Y/(K^aN^1-a)provides a calculation of

The basic classical model can account for the procyclical behavior of money if there

A temporary increase in government purchases in the classical model would

Suppose the economy's production function is Y = A(300N - N²).The marginal product of labor is MPN = A(300 - 2N).Suppose that A = 10.The supply of labor is NS = 0.05w + 0.005G. (a)If G is 26,000,what are the real wage,employment,and output? (b)If G rises to 26,400,what are the real wage,employment,and output? (c)If G falls to 25,600,what are the real wage,employment,and output? (d)In cases (b)and (c),what is the government purchases multiplier; that is,what is the change in output divided by the change in government purchases?

Which of the following is not a primary cause of business cycle fluctuations,according to real business cycle theory?

Labor hoarding occurs when

The primary reason that short-lived shocks can have long-run effects is

The short-run aggregate supply curve can slope upward because

A classical economy is described by the following equations: C^d = 500 + 0.5(Y - T)- 100r. I^d = 350 - 100r. L = 0.5Y - 200i. = 1850. π^e = 0.05. Government spending and taxes are equal where T = G = 200.The nominal money supply M = 3560. (a)What are the equilibrium values of the real interest rate,the price level,consumption,and investment? (b)Suppose an economic shock increases desired investment by 10,so it is now I^d = 360 - 100r.How does this affect the equilibrium values of the real interest rate,the price level,consumption,and investment? (c)Returning to the initial situation in part (a),suppose an economic shock increases desired consumption by 10,so it is now C^d = 510 + 0.5 (Y - T)- 100r.How does this affect the equilibrium values of the real interest rate,the price level,consumption,and investment?

According to the misperceptions theory,an unanticipated decrease in the money supply shifts the AD curve ________,causing output to ________ in the short run.

If the utilization rates of capital (u_K)and labor (u_N)are procyclical,then the Solow residual,as conventionally measured,is

According to the misperceptions theory,an anticipated decline in the money supply leads to a shift of the AD curve ________ and a shift of the SRAS curve ________.