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

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. In 2008, China reduced its corporate tax rate from 33 percent to 25 percent; this would cause a shift from curve ________ because changes in taxes ________ in the stylized DSGE model.

The quantitative DSGE model that is being used by the Fed and European Central Bank is from:

In 2003, Ireland reduced its corporate tax rate from 16 percent to 12.5 percent. In labor markets this would cause an increase in labor demand, which would push real wages up.

When taxes are included in the stylized DSGE model, with Cobb-Douglas production, labor demand is given by:

In December 2010, Congress and President Obama extended the G. W. Bush tax cuts to help pull the economy out of the Great Recession. You are pretty familiar with the Smets-Wouters DSGE model and decided to explain to local politicians why you do not think this will help households in the short run. Explain.

"DSGE" stands for:

In the stylized DSGE model with sticky prices, how does contractionary monetary policy shock affect the labor market?

A computer virus that temporarily shuts down major manufacturers would:

With a nominal price rigidity:

A change in total factor productivity will ________, which ________.

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. In 2005, Hurricane Katrina hit the Gulf Coast of the United States; this would cause a shift from curve ________ because this is an example of a(n) ________.

Using the Cobb-Douglas production $Y = \bar { A } K ^ { 1 / 4 } L ^ { 3 / 4 }$ , the marginal product of labor, or the real Wage, is:

Using the Cobb-Douglas production $Y = \bar { A } K ^ { 1 / 4 } L ^ { 3 / 4 }$ , the marginal product of labor, or the real wage, is $3 / 4 \cdot \frac { \bar { A } K ^ { - 1 / 4 } } { L ^ { 1 / 4 } }$ .

The problem the individual solves to derive the labor supply is:

In perfect competition, firms hire workers until the:

The fact that ________ almost as sharply as GDP in the Smets-Wouters DSGE model ________.

Refer to the following figure when answering Figure 15.2: The Labor Market -In the labor market displayed in Figure 15.2, the distance between points $a$ and $b$ Is called ________ and is due to ________.

Which of the following economists, and Nobel Prize winners, did NOT contribute to the DSGE literature?

Wages with taxes are higher than wages without taxes.

In the Smets-Wouters DSGE model, ________ when there is an increase in government spending because ________.