Exam 15: Dsge Models: the Frontier of Business Cycle Research

In the stylized DSGE model's representation of labor markets, if corporate tax rates rise and TFP rises, real wages would:

In the Smets-Wouters DSGE model, consumption falls when there is an increase in government spending because of consumption smoothing.

Using the labor market in the stylized DSGE model, from workers' perspectives, which of the following would be beneficial to them? i. A reduction in the sales tax rate ii. A reduction in the income tax rate iii. A reduction in TFP

The labor supply curve is increasing in ________ and decreasing in ________.

In the labor supply model $L ^ { s } = \frac { \bar { \ell } w } { c }$ , we can think of ________ as ________.

Inflation falls following the introduction of a financial friction in the Smets-Wouters DSGE model.

In the stylized DSGE model in the text, we treat consumption as endogenous.

Refer to the following figure when answering Figure 15.1: The Labor Market -Consider Figure 15.1, which is a representation of the labor market. If there is a forest fire that shuts down the electric grid, you would see a shift from curve ________ because this is an example of a(n) ________.

Which of the following features are frequently included in modern DSGE models? i. Nominal rigidities ii. Complete markets iii. Homogeneity

A change in total factor productivity will increase the demand for labor, which shifts the labor demand curve to the right.

In the real business cycle models, business cycles are caused by:

Refer to the following figure when answering Figure 15.2: The Labor Market -In the stylized DSGE model for the labor market displayed in Figure 15.2, the line marked $\bar W$ is due to which of the following? i. Cyclical unemployment ii. Sticky prices iii. The natural rate of unemployment

In a paper by Minneapolis Fed bank president Narayana Kocherlakota, he argues that research in macroeconomics is hampered by:

The first model to introduce a technology shock was the Solow real business cycle model.

In the stylized DSGE model, contrary to the Keynesian model, ________ government expenditure ________.

Refer to the following figure when answering Figure 15.2: The Labor Market -In the stylized DSGE model for the labor market displayed in Figure 15.2, with sticky wages, contractionary monetary policy would cause a move from ________ because ________.

In the abbreviation DGSE, the "S" stands for ________ and refers to ________ that impact the macroeconomy.

The first DSGE models were called cyclical models and used the Taylor rule to study macroeconomic fluctuations.

In the labor supply curve, the parameter $\bar \ell$ represents:

In DGSE models, the dynamics of how macrovariables react to a policy shock is called: