Question 1

According to efficiency wage models,

Accepted Answer

A) their key element is an explanation of why the efficiency (or productivity)of workers depends on the real wage. 
B) the rationale underlying those models implies that firms will set the real wage below the market clearing level. 
C) they explain real wage volatility. 
D) all of the above. 
A) their key element is an explanation of why the efficiency (or productivity)of workers depends on the real wage. 
B) the rationale underlying those models implies that firms will set the real wage below the market clearing level. 
C) they explain real wage volatility. 
D) all of the above.

Question 2

The simple real business cycle model production function is shown as

Accepted Answer

y_t = z_tF(K_t,N_t). Describe the difference(s)i

Question 3

Which of the following statements is (are)correct? In the insider/outsider model there is

Accepted Answer

A) unemployment due to the real wage being set above the market clearing level. 
B) cyclical unemployment in response to changes in aggregate demand. 
C) structural unemployment in response to hysteresis. 
D) Both a and b 
E) all of the above 
A) unemployment due to the real wage being set above the market clearing level. 
B) cyclical unemployment in response to changes in aggregate demand. 
C) structural unemployment in response to hysteresis. 
D) Both a and b 
E) all of the above

Question 4

In a study of whether prices are sticky or not,Alan Blinder supervised interviews of corporate executives on the frequency with which their firms change prices and found that

Accepted Answer

A) 55 percent of firms changed prices only once a year or less. 
B) over 20 percent of the firms changed prices more than 12 times per year. 
C) 10 percent of companies changed prices 4 to 12 times per year. 
D) there is not a considerable departure from auction-market behavior. 
A) 55 percent of firms changed prices only once a year or less. 
B) over 20 percent of the firms changed prices more than 12 times per year. 
C) 10 percent of companies changed prices 4 to 12 times per year. 
D) there is not a considerable departure from auction-market behavior.

Question 5

A usual assumption in real business cycle models is that the economy is populated by a group of identical individuals and the behavior of the group can then be explained in terms of the behavior of one individual,called a(n)

Accepted Answer

A) maximizing agent. 
B) representative agent. 
C) republican agent. 
D) informative agent. 
E) democratic agent 
A) maximizing agent. 
B) representative agent. 
C) republican agent. 
D) informative agent. 
E) democratic agent

Question 6

Which of the following shocks have been emphasized most often with respect to real business cycle theory?

Accepted Answer

A) Shocks to technology 
B) Variations in environmental conditions 
C) Changes in the real (relative)prices of imported raw materials 
D) Changes in tax rates 
E) None of the above 
A) Shocks to technology 
B) Variations in environmental conditions 
C) Changes in the real (relative)prices of imported raw materials 
D) Changes in tax rates 
E) None of the above

Question 7

In real business cycle models and new classical models

Accepted Answer

A) monetary factors are responsible for fluctuations in output and employment. 
B) changes in unemployment are involuntary. 
C) markets always clear. 
D) prices and wages are perfectly flexible. 
E) none of the above. 
A) monetary factors are responsible for fluctuations in output and employment. 
B) changes in unemployment are involuntary. 
C) markets always clear. 
D) prices and wages are perfectly flexible. 
E) none of the above.

Question 8

According to critics of new Keynesian economics,it is doubtful that

Accepted Answer

A) menu costs are very important in the real world. 
B) efficiency wage considerations play an important role in the real world. 
C) bargaining models are of significance in the real world. 
D) All of the above 
E) None of the above 
A) menu costs are very important in the real world. 
B) efficiency wage considerations play an important role in the real world. 
C) bargaining models are of significance in the real world. 
D) All of the above 
E) None of the above

Question 9

New Keynesians would agree with all of the following except

Accepted Answer

A) stabilization policy can reduce the severity of business cycles. 
B) wages and prices are sticky. 
C) markets are perfectly competitive. 
D) market equilibrium is often suboptimal. 
A) stabilization policy can reduce the severity of business cycles. 
B) wages and prices are sticky. 
C) markets are perfectly competitive. 
D) market equilibrium is often suboptimal.

Question 10

Explain what is meant by a representative agent.Why do real business cycle models make this assumption? What is the problem with this assumption?

Accepted Answer

A representative agent means that all in

Question 11

Which of the following models explains why high unemployment has persisted in some European countries for such long periods-periods too long to be the result of fixed money-wage contracts or backward-looking price expectations?

Accepted Answer

A) Insider outsider models 
B) Efficiency wage models 
C) Sticky price models 
D) IS-LM models 
A) Insider outsider models 
B) Efficiency wage models 
C) Sticky price models 
D) IS-LM models

Question 12

The real business cycle theory

Accepted Answer

A) argues for active stabilization policy. 
B) argues for interventionist policies in response to recessions. 
C) is in favor of a constant money growth rate rule for the money stock. 
D) is an offshoot of Monetarist theory. 
E) none of the above. 
A) argues for active stabilization policy. 
B) argues for interventionist policies in response to recessions. 
C) is in favor of a constant money growth rate rule for the money stock. 
D) is an offshoot of Monetarist theory. 
E) none of the above.

Question 13

In terms of unemployment,hysteresis models try to explain why

Accepted Answer

A) cyclical unemployment is always present. 
B) structural unemployment cannot be eradicated. 
C) high unemployment persists even after its initial cause is long past. 
D) frictional unemployment is the cause of hysteresis. 
A) cyclical unemployment is always present. 
B) structural unemployment cannot be eradicated. 
C) high unemployment persists even after its initial cause is long past. 
D) frictional unemployment is the cause of hysteresis.

Question 14

Which of the following efficiency wage models centers on the morale of a firm's workers? The

Accepted Answer

A) shirking model. 
B) gift exchange model. 
C) turnover model. 
D) None of the above 
A) shirking model. 
B) gift exchange model. 
C) turnover model. 
D) None of the above

Question 15

New Keynesian economists have examined whether real-world prices are,in fact,sticky.In one study of 38 magazines,Stephen Cecchetti found

Accepted Answer

A) that price rigidity was nonexistent with respect to magazines at newsstands. 
B) considerable rigidity with respect to the newsstand prices of magazines. 
C) that most of the 38 magazines in the study had price changes at least once a year. 
D) that the Readers Digest price was changed 15 times between 1950 and 1980. 
A) that price rigidity was nonexistent with respect to magazines at newsstands. 
B) considerable rigidity with respect to the newsstand prices of magazines. 
C) that most of the 38 magazines in the study had price changes at least once a year. 
D) that the Readers Digest price was changed 15 times between 1950 and 1980.

Question 16

New Keynesian theories of efficiency wages imply

Accepted Answer

A) voluntary unemployment. 
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) voluntary unemployment. 
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

Question 17

Real business cycle theorists agree with new classical economists that

Accepted Answer

A) agents maximize utility and form expectations rationally. 
B) the labor market do not clear. 
C) imperfect information plays a big role in business cycles. 
D) Both a and c 
A) agents maximize utility and form expectations rationally. 
B) the labor market do not clear. 
C) imperfect information plays a big role in business cycles. 
D) Both a and c

Question 18

The real business cycle theory and the new classical theory agree that

Accepted Answer

A) business cycles are driven by changes in aggregate demand. 
B) expectations are formed rationally. 
C) imperfect information plays a big role in business cycles. 
D) none of the above. 
A) business cycles are driven by changes in aggregate demand. 
B) expectations are formed rationally. 
C) imperfect information plays a big role in business cycles. 
D) none of the above.

According to efficiency wage models,

The simple real business cycle model production function is shown as

Which of the following statements is (are)correct? In the insider/outsider model there is

In a study of whether prices are sticky or not,Alan Blinder supervised interviews of corporate executives on the frequency with which their firms change prices and found that

A usual assumption in real business cycle models is that the economy is populated by a group of identical individuals and the behavior of the group can then be explained in terms of the behavior of one individual,called a(n)

Which of the following shocks have been emphasized most often with respect to real business cycle theory?

In real business cycle models and new classical models

According to critics of new Keynesian economics,it is doubtful that

New Keynesians would agree with all of the following except

Explain what is meant by a representative agent.Why do real business cycle models make this assumption? What is the problem with this assumption?

Which of the following models explains why high unemployment has persisted in some European countries for such long periods-periods too long to be the result of fixed money-wage contracts or backward-looking price expectations?

The real business cycle theory

In terms of unemployment,hysteresis models try to explain why

Which of the following efficiency wage models centers on the morale of a firm's workers? The

New Keynesian economists have examined whether real-world prices are,in fact,sticky.In one study of 38 magazines,Stephen Cecchetti found

New Keynesian theories of efficiency wages imply

Real business cycle theorists agree with new classical economists that

The real business cycle theory and the new classical theory agree that

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

According to efficiency wage models,

The simple real business cycle model production function is shown as

Which of the following statements is (are)correct? In the insider/outsider model there is

In a study of whether prices are sticky or not,Alan Blinder supervised interviews of corporate executives on the frequency with which their firms change prices and found that

A usual assumption in real business cycle models is that the economy is populated by a group of identical individuals and the behavior of the group can then be explained in terms of the behavior of one individual,called a(n)

Which of the following shocks have been emphasized most often with respect to real business cycle theory?

In real business cycle models and new classical models

According to critics of new Keynesian economics,it is doubtful that

New Keynesians would agree with all of the following except

Explain what is meant by a representative agent.Why do real business cycle models make this assumption? What is the problem with this assumption?

Which of the following models explains why high unemployment has persisted in some European countries for such long periods-periods too long to be the result of fixed money-wage contracts or backward-looking price expectations?

The real business cycle theory

In terms of unemployment,hysteresis models try to explain why

Which of the following efficiency wage models centers on the morale of a firm's workers? The

New Keynesian economists have examined whether real-world prices are,in fact,sticky.In one study of 38 magazines,Stephen Cecchetti found

New Keynesian theories of efficiency wages imply

Real business cycle theorists agree with new classical economists that

The real business cycle theory and the new classical theory agree that

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