Exam 17: New Classical Macro Confronts New Keynesian Macro

If a macroeconomic model consists of upward-sloping short-run aggregate supply and downward-sloping aggregate demand, can it possibly generate a constant real GDP with no business cycles over time?

One of the major weaknesses of the original Keynesian approach to the business cycle was

A supply shock that reduces labor productivity

In the non-market-clearing model, "involuntary" unemployment results because

The downfall of the fooling model is that it assumes an implausibly ________ level of perception about price on the part of ________.

When there is extremely high and volatile inflation in an economy, the decision-making of firms leads to a very ________ SAS curve and thus relatively ________ cycles in real GDP.

If imperfect information characterizes workers' behavior then there will be a

Nonunion wages should be modeled as

The reluctance to change the relative relationships between wage rates is called a

Suppose there is a 5 percent increase in nominal demand in every industry in an economy. Factors that keep the price level from also rising by 5 percent are called

Staggered, overlapping contracts mean

In the RBC model, supply shocks

The actual real wage must be below the equilibrium real wage in order to encourage firms to produce at any output level above the natural rate. Once workers realize this situation, their expected price level will gradually rise and they will demand a higher nominal wage. This description of a business cycle adjustment is part of which of the following theories?

Figure 17-3 -In the figure above, suppose we are working under the assumption of the Lucas model. Suddenly, monetary policy becomes more expansionary and every firm believes that the higher prices bid on their product is not being enjoyed by any other firm. We would picture this as a movement between points

In 1989, Sears and Roebuck closed its stores and remarked every price in its stores to reflect a new "lower everyday" pricing strategy. Sears must have believed at that time that

An adverse supply shock shifts the production function curve ________ and the labor demand curve ________.

Were the government to decree that henceforth all wages and other input prices are to be indexed to nominal aggregate demand, this ________ "coordination failure" of the macroeconomy and ________ business cycles.

In the fooling model's labor market diagram, from an initial intersection point of the labor supply and demand curves, tracing "southwest" down the labor supply curve shows

Assuming that workers will be pushed off their labor supply curve in response to a change in aggregate demand is part of which of the following theories?

In the fooling model's labor market diagram, from an initial intersection point of the labor supply and demand curves, tracing "northeast" up the labor supply curve shows