Exam 13: Business Cycle Models with Flexible Prices and Wages

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

One potential weakness of the coordination failure model as an explanation of business cycles is that

If an economy is stuck in a "bad" equilibrium in the coordination failure model

The appropriate monetary policy response to a situation with deficient financial liquidity

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

In the coordination failure model,increasing returns to scale are best explained by strategic

What is the appropriate monetary policy response to a situation with deficient financial liquidity,when there is a liquidity trap?

A reduction in financial liquidity,producing deficient liquid assets

A government policy that is consistent with real business cycle theory would be for

The coordination failure model is based on the possibility of increasing returns to scale

An important critique of real business cycle theory is the belief that cyclical movements in total factor productivity

For the coordination failure model to work,it must be the case that the aggregate labor demand curve must be

In the coordination failure model,we mention sunspots because

In the real business cycle model,an increase in current total factor productivity leads to

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

A reduction in financial liquidity,producing deficient liquid assets

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

A model with coordination failures has

The phenomenon of underutilization of labor during a recession is called

Strategic complementarities may help explain business cycles because such complementarities may lead to