Exam 22: Modern Business Cycle Theory

Research supporting the new Keynesian model finds that prices are ________.

In the new Keynesian model, if an aggregate demand increase is unanticipated, then ________.

In macroeconomic modelling, as price flexibility increases________.

An increase in financial frictions results in ________.

How might a real business cycle theorist explain the "Volcker recession" of the early 1980s?

The level of income is unchanged in response to anticipated anti-inflation policy in ________.

In real business cycle models, a change in willingness to work ________.

The zero-lower-bound problem develops when ________.

The New Keynesian model, is Keynesian in that ________.

Prices are regarded as sticky in ________.

Suppose a tax cut that had been anticipated by households and businesses doesn't happen. Describe a new Keynesian analysis of the consequences of this "event."

As the U.S. economy recovers from the recession of 2007-2009, stubbornly high unemployment is a concern. For each of the three business cycle models, identify the appropriate policy regime.

Expectations are adaptive in ________.

In the absence of financial frictions, ________.

No distinction is made between the effects of anticipated and unanticipated policy in ________.

In the aggregate production function Y = A K0.3L0.7, real business cycle theory treats ________ as the key independent variable.

The real business cycle model suggests that, with aggregate demand unchanged, increases in output would be associated with ________.

Credibility is important to successful anti-inflationary policy in ________.

According to the real business cycle model, a rightward shift in the long-run aggregate supply schedule would be caused by________.

In the real business cycle model, the short-run aggregate supply curve is always the same as ________.