Question 1

Real business cycle proponents argue that

Accepted Answer

A) recessions are caused by movements of output away from the natural rate of output. 
B) prices and wages are sticky. 
C) macroeconomics should be based on the same assumptions as microeconomics. 
D) monetary policy is important in determining recessions. 
E) none of the above. 
A) recessions are caused by movements of output away from the natural rate of output. 
B) prices and wages are sticky. 
C) macroeconomics should be based on the same assumptions as microeconomics. 
D) monetary policy is important in determining recessions. 
E) none of the above.

Question 2

Which of the following statements is (are)correct? Critics of the real business cycle model

Accepted Answer

A) question whether technology has ever been the cause of a recession. 
B) do not deny that some technology shocks affect many industries.However,they do not believe that there are enough of these shocks to explain recessions where output falls too as much as 10 percent below potential output. 
C) argue that aggregate supply changes drive most business cycles. 
D) All of the above 
E) None of the above 
A) question whether technology has ever been the cause of a recession. 
B) do not deny that some technology shocks affect many industries.However,they do not believe that there are enough of these shocks to explain recessions where output falls too as much as 10 percent below potential output. 
C) argue that aggregate supply changes drive most business cycles. 
D) All of the above 
E) None of the above

Question 3

Which of the following cannot be used to justify efficiency wages

Accepted Answer

A) Sticky price (menu cost)models 
B) turnover costs 
C) worker shirking 
D) worker morale 
A) Sticky price (menu cost)models 
B) turnover costs 
C) worker shirking 
D) worker morale

Question 4

Explain the ways in which the real business cycle model is an extension of the Classical model.In what ways are they different?

Accepted Answer

The real business cycle theory is a mode

Question 5

Real business cycle and new Keynesian models disagree upon

Accepted Answer

A) whether people form their expectations rationally. 
B) whether changes in unemployment are voluntary or involuntary. 
C) whether individuals engage in optimizing behavior at all times. 
D) whether changes in the money supply affect output in the long-run. 
A) whether people form their expectations rationally. 
B) whether changes in unemployment are voluntary or involuntary. 
C) whether individuals engage in optimizing behavior at all times. 
D) whether changes in the money supply affect output in the long-run.

Question 6

In the real business cycle model,business cycles are

Accepted Answer

A) efficient and do not represent lost output. 
B) driven by technology shocks. 
C) occur when markets clear. 
D) all of the above. 
E) None of the above 
A) efficient and do not represent lost output. 
B) driven by technology shocks. 
C) occur when markets clear. 
D) all of the above. 
E) None of the above

Question 7

Numerous studies of the labor market (and your own experience)suggest that the labor market is becoming increasingly specialized,meaning that each job increasingly requires a unique set of education and job training skills.Analyze this development within the context of a model of efficiency wages.What impact do you think this has on unemployment? Wage flexibility? How do you think that firms respond to these developments? Provide graphs of the labor market to illustrate.

Accepted Answer

These developments are likely to increas

Question 8

According to real business cycle theory,real wages are _____ correlated with employment and the portion of the population that is not in the labor market _____ with higher real wages.

Accepted Answer

A) positively; rises. 
B) negatively,does not change. 
C) negatively,rises. 
D) positively; falls. 
E) none of the above. 
A) positively; rises. 
B) negatively,does not change. 
C) negatively,rises. 
D) positively; falls. 
E) none of the above.

Question 9

The aggregate production function for real business cycle models is shown as

Accepted Answer

A) yt = F(Kt,Nt). 
B) yt = ztF(Kt - Nt). 
C) yt = ztF(Kt,Nt). 
D) yt = zt/(Kt,Nt). 
A) yt = F(Kt,Nt). 
B) yt = ztF(Kt - Nt). 
C) yt = ztF(Kt,Nt). 
D) yt = zt/(Kt,Nt).

Question 10

Advocates of real business cycle theories argue that all of the following could cause a recession except

Accepted Answer

A) a fall in consumer expectations. 
B) natural disasters. 
C) higher taxation. 
D) increases in the price of oil. 
A) a fall in consumer expectations. 
B) natural disasters. 
C) higher taxation. 
D) increases in the price of oil.

Question 11

Which of the following statements is (are)correct? According to real business cycle theory,

Accepted Answer

A) the desirable monetary policy would appear to be one that results in a slow steady growth in the money supply and,thus,stable prices. 
B) there is some role for activist monetary stabilization policy of a Keynesian type. 
C) changes in aggregate demand cannot impact output. 
D) Both a and b 
E) Both a and c 
A) the desirable monetary policy would appear to be one that results in a slow steady growth in the money supply and,thus,stable prices. 
B) there is some role for activist monetary stabilization policy of a Keynesian type. 
C) changes in aggregate demand cannot impact output. 
D) Both a and b 
E) Both a and c

Question 12

Which of the following models view changes in real supply-side factors as determinants of short-run fluctuations in output and employment?

Accepted Answer

A) New classical models 
B) Political business cycle models 
C) Keynesian models 
D) Real business cycle models 
E) none of the above 
A) New classical models 
B) Political business cycle models 
C) Keynesian models 
D) Real business cycle models 
E) none of the above

Question 13

Menu costs suggest that sticky prices are ____ for firms but _____ for the economy as a whole.

Accepted Answer

A) optimal; suboptimal 
B) bad; good 
C) natural; unnatural 
D) suboptimal; optimal. 
E) suboptimal; suboptimal 
A) optimal; suboptimal 
B) bad; good 
C) natural; unnatural 
D) suboptimal; optimal. 
E) suboptimal; suboptimal

Question 14

New Keynesian economics differs from real business cycle economics in that

Accepted Answer

A) markets are perfectly competitive in new Keynesian models. 
B) business cycles are fluctuations in the natural rate of unemployment in new Keynesian models. 
C) wages and prices are perfectly flexible. 
D) agents maximize utility in the new Keynesian model. 
E) none of the above. 
A) markets are perfectly competitive in new Keynesian models. 
B) business cycles are fluctuations in the natural rate of unemployment in new Keynesian models. 
C) wages and prices are perfectly flexible. 
D) agents maximize utility in the new Keynesian model. 
E) none of the above.

Question 15

Real business cycle proponents would agree with all of the following except

Accepted Answer

A) the government's efforts to stabilize the economy can be counterproductive. 
B) unanticipated changes in the money supply are destabilizing to the economy. 
C) business cycles are a natural response to technology shocks. 
D) markets are perfectly competitive. 
A) the government's efforts to stabilize the economy can be counterproductive. 
B) unanticipated changes in the money supply are destabilizing to the economy. 
C) business cycles are a natural response to technology shocks. 
D) markets are perfectly competitive.

Question 16

Which of the following is correct? A general assumption in real business cycle models is that

Accepted Answer

A) dissimilar individuals populate the economy. 
B) the labor market does not clear. 
C) the economy is populated by a group of identical individuals. 
D) the economy experiences involuntary unemployment. 
A) dissimilar individuals populate the economy. 
B) the labor market does not clear. 
C) the economy is populated by a group of identical individuals. 
D) the economy experiences involuntary unemployment.

Question 17

In any efficiency wage model,it must be true that

Accepted Answer

A) the marginal benefit of increased efficiency is equal to the marginal cost of higher wages. 
B) nominal wages are inflexible. 
C) disequilibrium in the labor market exists. 
D) all of the above. 
E) none of the above. 
A) the marginal benefit of increased efficiency is equal to the marginal cost of higher wages. 
B) nominal wages are inflexible. 
C) disequilibrium in the labor market exists. 
D) all of the above. 
E) none of the above.

Question 18

In the real business cycle theory,during a period when output is falling,

Accepted Answer

A) workers are voluntarily giving up their jobs. 
B) the quantity supplied of labor is falling. 
C) aggregate productivity must be falling. 
D) all of the above. 
E) none of the above. 
A) workers are voluntarily giving up their jobs. 
B) the quantity supplied of labor is falling. 
C) aggregate productivity must be falling. 
D) all of the above. 
E) none of the above.

Question 19

New Keynesian economists

Accepted Answer

A) believe that the deviations of output below potential output during recessions are socially costly. 
B) presume that much unemployment is involuntary. 
C) attempt to improve the microeconomic foundations of the traditional Keynesian models,not challenge their major premises. 
D) Both a and c 
E) All of the above 
A) believe that the deviations of output below potential output during recessions are socially costly. 
B) presume that much unemployment is involuntary. 
C) attempt to improve the microeconomic foundations of the traditional Keynesian models,not challenge their major premises. 
D) Both a and c 
E) All of the above

Question 20

The new Keynesian theories of efficiency wages imply

Accepted Answer

A) nominal wage rigidity. 
B) real wage rigidity. 
C) changes in unemployment represent changes in the natural rate of unemployment. 
D) market clearing in the labor market in the long-run. 
E) None of the above 
A) nominal wage rigidity. 
B) real wage rigidity. 
C) changes in unemployment represent changes in the natural rate of unemployment. 
D) market clearing in the labor market in the long-run. 
E) None of the above

Real business cycle proponents argue that

Which of the following statements is (are)correct? Critics of the real business cycle model

Which of the following cannot be used to justify efficiency wages

Explain the ways in which the real business cycle model is an extension of the Classical model.In what ways are they different?

Real business cycle and new Keynesian models disagree upon

In the real business cycle model,business cycles are

According to real business cycle theory,real wages are _ correlated with employment and the portion of the population that is not in the labor market _ with higher real wages.

The aggregate production function for real business cycle models is shown as

Advocates of real business cycle theories argue that all of the following could cause a recession except

Which of the following statements is (are)correct? According to real business cycle theory,

Which of the following models view changes in real supply-side factors as determinants of short-run fluctuations in output and employment?

Menu costs suggest that sticky prices are for firms but _ for the economy as a whole.

New Keynesian economics differs from real business cycle economics in that

Real business cycle proponents would agree with all of the following except

Which of the following is correct? A general assumption in real business cycle models is that

In any efficiency wage model,it must be true that

In the real business cycle theory,during a period when output is falling,

New Keynesian economists

The new Keynesian theories of efficiency wages imply

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Classical Macroeconomics II: Money,prices,and Interest

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

Keynesian System Iv: Aggregate Supply and Demand

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

New Classical Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Money,the Banking System,and Interest Rates

Optimal Monetary Policy

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters

Exam 12: Real Business Cycles and New Keynesian Economics

Real business cycle proponents argue that

Which of the following statements is (are)correct? Critics of the real business cycle model

Which of the following cannot be used to justify efficiency wages

Explain the ways in which the real business cycle model is an extension of the Classical model.In what ways are they different?

Real business cycle and new Keynesian models disagree upon

In the real business cycle model,business cycles are

According to real business cycle theory,real wages are _____ correlated with employment and the portion of the population that is not in the labor market _____ with higher real wages.

The aggregate production function for real business cycle models is shown as

Advocates of real business cycle theories argue that all of the following could cause a recession except

Which of the following statements is (are)correct? According to real business cycle theory,

Which of the following models view changes in real supply-side factors as determinants of short-run fluctuations in output and employment?

Menu costs suggest that sticky prices are ____ for firms but _____ for the economy as a whole.

New Keynesian economics differs from real business cycle economics in that

Real business cycle proponents would agree with all of the following except

Which of the following is correct? A general assumption in real business cycle models is that

In any efficiency wage model,it must be true that

In the real business cycle theory,during a period when output is falling,

New Keynesian economists

The new Keynesian theories of efficiency wages imply

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Classical Macroeconomics II: Money,prices,and Interest

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

Keynesian System Iv: Aggregate Supply and Demand

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

New Classical Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Money,the Banking System,and Interest Rates

Optimal Monetary Policy

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters

According to real business cycle theory,real wages are _ correlated with employment and the portion of the population that is not in the labor market _ with higher real wages.

Menu costs suggest that sticky prices are for firms but _ for the economy as a whole.