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:

Figure 15.1: The Labor Market a. and d. b. . e. None of these answers is correct. c. . -In the stylized DSGE model, contrary to the Keynesian model, ________ government expenditure ________.

Figure 15.1: The Labor Market a. and d. b. . e. None of these answers is correct. c. . -In the stylized DSGE model, if government expenditures rise, ________ rise(s) and ________, which causes ________.

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

A new colleague of yours decided to try her hand at DSGE models and found some computer code that allows her to run a version of the Smets-Wouters DSGE model. She decides to try a contractionary monetary shock. When she does, she gets the following impulse response function for real GDP (left scale), consumption (left), and inflation (right). When she shows you her results, you are immediately skeptical, based on what you know about economic theory and impulse response functions. Explain your skepticism.Figure 15.6

Refer to the following figure when answering the following questions. 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) ________.

In the impulse response function presented in the text, the effects of contractionary monetary policy on real GDP dissipate:

In the stylized DSGE model with sticky prices, we can characterize contractionary monetary policy shock effect in the labor market by .

Which of the following are frequent sources of shocks included in modern DSGE models? i. Factor productivity ii. Complete markets iii. Monetary policy

In the labor supply model , we can think of ________ as ________.

Which of the following represents labor supply?

In the simplified DSGE model in the text, we treat:

The key change the early DSGE models made to the ________ was to change the nature of ________ from ________.

In Figure 15.1, which is a representation of the labor market, a decrease in government expenditure is represented by:

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

Sticky nominal wages can lead to:

The first order condition from the individual's utility maximization problem used to determine the labor supply curve is:

An example of the limits of using TFP as the sole driver of recessions is:

In the movie (and book) Sahara, toxic waste is leeching into Mali's groundwater. Which of the following effects would you expect to occur in the DSGE framework? i. A decline in the marginal product of labor ii. An increase in output iii. A decline in the real wage

In the Smets-Wouters DSGE model, a negative TFP shock will cause real GDP to ________ By ________.