Question 1

Describe the new neoclassical synthesis.

Accepted Answer

The new neoclassical synthesis blended c

Question 2

DSGE models that contain households and firms that are identical are known as

Accepted Answer

A) heterogeneous-agent models. 
B) homogeneous-agent models. 
C) dynamic models. 
D) multi-layered models. 
A) heterogeneous-agent models. 
B) homogeneous-agent models. 
C) dynamic models. 
D) multi-layered models.

Question 3

Researchers who support the RBC model found out that an RBC model could account for as much as _____of the fluctuations in output growth.?

Accepted Answer

A) ?70 percent 
B) ?60 percent 
C) ?50 percent 
D) ?75 percent 
A) ?70 percent 
B) ?60 percent 
C) ?50 percent 
D) ?75 percent

Question 4

In the two-period model, a decrease in income in period 2 causes the budget constraint to

Accepted Answer

A) shift to the left in a parallel fashion. 
B) shift to the right in a parallel fashion. 
C) rotate in a clockwise direction along the horizontal axis. 
D) rotate in a counterclockwise direction along the vertical axis. 
A) shift to the left in a parallel fashion. 
B) shift to the right in a parallel fashion. 
C) rotate in a clockwise direction along the horizontal axis. 
D) rotate in a counterclockwise direction along the vertical axis.

Question 5

In the two-period model, suppose a household's income in the first period is $40,000, income in the second period is $50,000, and the real interest rate is 25 percent.By how much would the household's maximum spending in the first period increase if income in the second period increased to 60,000?

Accepted Answer

A) $6,000 
B) $8,000 
C) $10,000 
D) $12,000 
A) $6,000 
B) $8,000 
C) $10,000 
D) $12,000

Question 6

In the two-period model, suppose a household's income in the first period is $40,000, income in the second period is $30,000, and the real interest rate is 25 percent.Draw a diagram showing the budget constraint.Now, suppose the real interest rate rises to 30 percent.Draw the new budget constraint.For the budget constraints you have drawn, be sure to show the values of the intercepts on each axis.If the household decides that its consumption in period 1 should always equal its consumption in period 2, determine whether the household is worse off or better off because of the decline in the real interest rate.Show your work.

Accepted Answer

Initial situation: intercept for first-p

Question 7

Which of the following is an advantage of using dynamic models?

Accepted Answer

A) ​They help us understand how people form expectations about future economic variables. 
B) ​They help us understand the consumption decision of economic agents at a given point in time. 
C) ​They help us understand the production decisions of firms at a given point in time. 
D) ​They help us understand the movements in the business cycle. 
A) ​They help us understand how people form expectations about future economic variables. 
B) ​They help us understand the consumption decision of economic agents at a given point in time. 
C) ​They help us understand the production decisions of firms at a given point in time. 
D) ​They help us understand the movements in the business cycle.

Question 8

Economic research over the last 20 years suggests that expectations are best modeled as_____ variables?.

Accepted Answer

A) ?dummy 
B) ?ordinal 
C) ?endogenous 
D) ?preference 
A) ?dummy 
B) ?ordinal 
C) ?endogenous 
D) ?preference

Question 9

In the two-period model, suppose a household's income in the first period is $40,000, income in the second period is $50,000, and the real interest rate is 25 percent.What is the maximum amount that the household would be able to spend in the first period?

Accepted Answer

A) $40,000 
B) $50,000 
C) $80,000 
D) $100,000 
A) $40,000 
B) $50,000 
C) $80,000 
D) $100,000

Question 10

Can VARs be used to analyze the effects of monetary policy?

Accepted Answer

Because of the Lucas critique, VARs migh

Question 11

An economy has 100 households.The ten rich households each have incomes of $50,000 in period 1 and $75,000 in period 2.The ninety poor households each have incomes of $20,000 in period 1 and $25,000 in period 2.Assume that the price of the good is $1 in both periods.Also assume that the households borrow from each other.Suppose that each household decides that its consumption in period 1 will equal 50 percent of the present value of its income from both periods.The equilibrium real interest rate is about

Accepted Answer

A) 20 percent. 
B) 30 percent. 
C) 40 percent. 
D) 50 percent. 
A) 20 percent. 
B) 30 percent. 
C) 40 percent. 
D) 50 percent.

Question 12

An economy has 100 households.The forty rich households each have incomes of $50,000 in period 1 and $75,000 in period 2.The sixty poor households each have incomes of $20,000 in period 1 and $25,000 in period 2.Assume that the price of the good is $1 in both periods.Also assume that the households borrow from each other.Suppose that each household decides that its consumption in period 1 will equal 50 percent of the present value of its income from both periods.The equilibrium real interest rate is about

Accepted Answer

A) 20 percent. 
B) 30 percent. 
C) 40 percent. 
D) 50 percent. 
A) 20 percent. 
B) 30 percent. 
C) 40 percent. 
D) 50 percent.

Question 13

The amount of goods and services that a household can consume, given its income, is represented ​by a(n)

Accepted Answer

A) ​indifference curve. 
B) ​budget line. 
C) ​demand curve. 
D) supply curve. 
A) ​indifference curve. 
B) ​budget line. 
C) ​demand curve. 
D) supply curve.

Question 14

Critics of RBC models argue that

Accepted Answer

A) they cannot be solved analytically. 
B) are subject to measurement errors. 
C) it is not possible to replicate the models. 
D) the models are estimated imprecisely. 
A) they cannot be solved analytically. 
B) are subject to measurement errors. 
C) it is not possible to replicate the models. 
D) the models are estimated imprecisely.

Question 15

In the two-period model, a higher real interest rate

Accepted Answer

A) increases the present value of income. 
B) causes the budget constraint to rotate in a counterclockwise direction. 
C) makes households that had initially planned to save better off. 
D) makes households that had initially planned to borrow better off. 
A) increases the present value of income. 
B) causes the budget constraint to rotate in a counterclockwise direction. 
C) makes households that had initially planned to save better off. 
D) makes households that had initially planned to borrow better off.

Question 16

A statistical model that assumes that the value of a variable at any date depends on its own past values, plus the past values of other variables, plus an error term is known as a

Accepted Answer

A) vector autoregression (VAR) model. 
B) univariate time-series model. 
C) structural VAR model. 
D) structural equilibrium model. 
A) vector autoregression (VAR) model. 
B) univariate time-series model. 
C) structural VAR model. 
D) structural equilibrium model.

Describe the new neoclassical synthesis.

DSGE models that contain households and firms that are identical are known as

Researchers who support the RBC model found out that an RBC model could account for as much as _____of the fluctuations in output growth.?

In the two-period model, a decrease in income in period 2 causes the budget constraint to

In the two-period model, suppose a household's income in the first period is $40,000, income in the second period is $50,000, and the real interest rate is 25 percent.By how much would the household's maximum spending in the first period increase if income in the second period increased to 60,000?

Which of the following is an advantage of using dynamic models?

Economic research over the last 20 years suggests that expectations are best modeled as_____ variables?.

In the two-period model, suppose a household's income in the first period is $40,000, income in the second period is $50,000, and the real interest rate is 25 percent.What is the maximum amount that the household would be able to spend in the first period?

Can VARs be used to analyze the effects of monetary policy?

The amount of goods and services that a household can consume, given its income, is represented by a(n)

Critics of RBC models argue that

In the two-period model, a higher real interest rate

A statistical model that assumes that the value of a variable at any date depends on its own past values, plus the past values of other variables, plus an error term is known as a

Money and the Financial System

The Financial System and the Economy

Money and Payments

Present Value

The Structure of Interest Rates

Real Interest Rates

Stocks and Other Assets

How Banks Work

Governments Role in Banking

Economics Growth and Business Cycles

Modeling Money

The Aggregate-Demandaggregate-Supply Model

Economic Interdependence

The Federal Reserve System

Monetary Control

Monetary Policy: Goals and Tradeoffs

Rules for Monetary Policy

Filters

Exam 13: Modern Macroeconomic Models

Describe the new neoclassical synthesis.

DSGE models that contain households and firms that are identical are known as

Researchers who support the RBC model found out that an RBC model could account for as much as _____of the fluctuations in output growth.?

In the two-period model, a decrease in income in period 2 causes the budget constraint to

In the two-period model, suppose a household's income in the first period is $40,000, income in the second period is $50,000, and the real interest rate is 25 percent.By how much would the household's maximum spending in the first period increase if income in the second period increased to 60,000?

Which of the following is an advantage of using dynamic models?

Economic research over the last 20 years suggests that expectations are best modeled as_____ variables?.

In the two-period model, suppose a household's income in the first period is $40,000, income in the second period is $50,000, and the real interest rate is 25 percent.What is the maximum amount that the household would be able to spend in the first period?

Can VARs be used to analyze the effects of monetary policy?

The amount of goods and services that a household can consume, given its income, is represented ​by a(n)

Critics of RBC models argue that

In the two-period model, a higher real interest rate

A statistical model that assumes that the value of a variable at any date depends on its own past values, plus the past values of other variables, plus an error term is known as a

Money and the Financial System

The Financial System and the Economy

Money and Payments

Present Value

The Structure of Interest Rates

Real Interest Rates

Stocks and Other Assets

How Banks Work

Governments Role in Banking

Economics Growth and Business Cycles

Modeling Money

The Aggregate-Demandaggregate-Supply Model

Economic Interdependence

The Federal Reserve System

Monetary Control

Monetary Policy: Goals and Tradeoffs

Rules for Monetary Policy

Filters

The amount of goods and services that a household can consume, given its income, is represented by a(n)