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Total Factor Productivity Shocks Are Not a Good Explanation of Economic

Question 13

Multiple Choice

Total factor productivity shocks are not a good explanation of economic fluctuations in the New Keynesian model for all the following reasons except


A) they do not generate output fluctuations.
B) employment drops when TFP increases.
C) the real wage drops when TFP increases.
D) they do not generate price fluctuations.

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