Exam 10: Classical Business Cycle Analysis

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

A temporary beneficial productivity shock would

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

Describe,in general terms,how an economist calibrates a macroeconomic model.What statistics can be usefully examined to see how well the model corresponds to the data?

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

Reverse causation is the idea that

Models that are similar to RBC models but allow for shocks other than productivity shocks are known as

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

Davis and Haltiwanger showed that ________ churning of jobs occurs and that this churning reflects closing of old plants and opening of new ones ________.

Analyze the short-run and long-run effects of an unanticipated decrease in the money supply in the misperceptions model.Tell what happens to output,the price level,and the expected price level in both the short run and long run.

The most common measure of productivity shocks is known as

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 ________.

Suppose the economy is characterized by the following equations. IS curve: r = 20.20 - 0.002Y LM curve: M/P = Y - 250(r + ?e) SRAS curve: Y = + 100(P - Pe) The nominal money supply is M = 19,800,expected inflation is ?e = 0.20,and full-employment output is = 10,000. (a)If the economy begins in general equilibrium,what are the equilibrium values of the price level,output,and the real interest rate? (b)If the expected price level is the price level you found in part (a),what happens to the price level,output,and the real interest rate in the short run if there's an unanticipated decrease in the nominal money supply to 14,737.5? {Hint: guess some price levels that differ from the one you found in part (a)by increments of 0.25.} (c)If the expected price level is the price level you found in part (a),what happens to the price level,output,and the real interest rate in the short run if there's an unanticipated increase in the nominal money supply to 24,937.5?

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?

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

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

DSGE models are

Classical economists who allow for shocks other than productivity shocks to affect the economy use ________ models rather than RBC models.

How do RBC theorists answer the objection that there have been few examples of large and easily measurable real shocks to the U.S.economy in recent decades?

Assuming that money is neutral,an increase in the nominal money supply would cause