Exam 12: Thinking Like a Modern Macroeconomist

Why does a general equilibrium model not require that you hold "all other things constant" like a partial equilibrium model (such as the simple supply and demand model)?

What is the fallacy of composition and how does it relate to the Keynesian model?

How did the macroeconomists of the 1960s proceed as they moved away from the top-down model of the economy?

Are all modern macroeconomists as unconcerned about policy implications as Robert Lucas,who said that he would resign were he appointed to the President's Council of Economic Advisers?

How does the addition of insights from behavioral economics create even more possibilities for fluctuations in the aggregate economy?

Which set of underlying dynamic assumptions could lead to prices that are always market-clearing (equilibrium)prices with no persistent fluctuations?

What is a top-down model of the economy? Why would a macroeconomist choose such a model?

What would someone who recognizes the Ricardian equivalence problem say about using government deficit spending to stimulate the economy?

How does the current state of the economy affect which model should be chosen?

Which set of underlying dynamic assumptions could lead to a fluctuating price that never reaches equilibrium?

What are the advantages and disadvantages of the standard macro model?

Why is it important to learn about modern macroeconomic theory?

What is the Ricardian equivalence problem?

What are the "dynamic assumptions" of a model? Contrast the underlying dynamic assumptions of the standard,DSGE and complex systems models of macroeconomics.

The individual described by the DSGE model has a perfectly-conventional time-additive utility function.What does this mean?

What does DSGE stand for? Where does the DSGE model fit within the context of the development of macroeconomics?

Using the graph below,demonstrate how historical price expectations on the part of suppliers will impact a market in which the demand curve shifts to the right.How quickly will the market reach equilibrium?

Which model that you've learned so far best typifies a standard macro model? Is it an engineering model or a scientific model? Explain.

What is the complex systems approach to modern macroeconomics?

Give an overview of the historical development of macroeconomics,beginning with classical economics and ending with modern macroeconomics.