Regardless of many assumptions, an equilibrium business-cycle model can go a long way in matching actual economic fluctuations for many macroeconomic variables. Please write down examples and explain its possible reasonings?

Regardless of many assumptions, an equilibrium business-cycle model can go a long way in matching actual economic fluctuations for many macroeconomic variables. Please write down examples and explain its possible reasonings?

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 9E

See similar textbooks

Related questions

Q: The new Keynesian cycle theory views only anticipated changes in aggregate demand as the source of…

A: The above statement is true. According to the new Keynesian cycle theory firms and households have…

Q: What is the difference betw een the Keynesian model and the classical model when it comes to…

A: The Classical Model suggests that the economy is always at the full employment level of output,…

Q: The left-hand Which of the following statements is tru about the diagrams above depicting the…

A: The classical and Keynesian framework are both completely different in the models of aggregate…

Q: real business cycle models (RBC) are preferable to traditional Keynesian macroeconomic models.

A: real business cycle models (RBC) are preferable to traditional Keynesian macroeconomic models. -…

Q: What are some arguments and implications as it relates to Business Cycles in Emerging Economies ?…

A: A business cycle is basically defined by the alternation of stages of expansion and contraction of…

Q: If an economy’s self-correcting mechanism worksslowly, should the government necessarily pursuean…

A: The principle that if economy is left to its own devices is called self-correcting. When an economy…

Q: The Key difference between Keynesian economists and real business cycle theorists is A) Keynesians…

A: Answer: Keynesian economists favour the role of government in managing the economy, especially…

Q: In the AD/AS model, which of the following can cause a rise in cyclical unemployment: (check all…

A: Aggregate demand (AD): - It is the total demand of goods and services in an economy at a particular…

Q: Explain it correctly not copy paste Q)In the Real Business Cycle model, what is the effective…

A: Effective investment refers to the net addition to the capital stock of economy which is measured by…

Q: Do you believe that the Hayek's classical AD-AS model explains the factors that cause changes…

A: The Hayek's classical AD-AS model can be illustrated as follows: In the figure, horizontal axis…

Q: Is Keynesian economics relevant in today's new normal? In what way? Explain.

A: According to Keynesian economics economic output is influenced by aggregate demand in short run. It…

Q: Consider the two-period real intertemporal model with investment from Chapter 11. (a) What does the…

A: Consider the two-period real intertemporal model with investment from Chapter 11.(a) What does the…

Q: Which of te following does not contribute to the real business cycle explanation of business cycle?…

A: Real business cycle theory doesn't incorporate aggregate supply.

Q: TRUE/FALSE. Brietly explain your answer. a) The real business cycle model is very helptul because we…

A: Monetary policy is a bunch of activities that can be embraced by a country's central bank to control…

Q: What is the fundamental source of transition dynamics in our AS/AD frame-work?

A: AS-AD framework is one of the most important topics covered in Macroeconomics. In AS-AD model output…

Q: Consider the two graphs below. Then answer the questions. Initially both economies on the Left and…

A: Steady-state is an economic concept that aims towards finding an equilibrium between output growth…

Q: oes it make sense that wages would be sticky downwards but not upwards? Why or why not?

A: Wage is an installment typically finished by a business to a worker for administrations presented by…

Q: In the AD-SRAS-LRAS model, what is the only possible way to simultaneously lower inflation (downward…

A: Demand refers the total amount of goods and services that are willing and able to buy at the…

Q: 1. Consider the following classical macroeconomic model. Y - C(Y –T') + I(r -x)+G 0 0,1 0 (4) N = Nº…

A: Equation 1 is of GDP: Where C(Y-T) is consumption function. Households, corporations, and the…

Q: What is the condition of the U.S. economy now (phase of business cycle, GDP growth rate,…

A: According to several sources, the US GDP growth rate was on average -4.27% during 2020, compared to…

Q: How do the long-run model and the short-run model ft together? What isthe purpose of each model?

A: Short-run refers to the time period when some factors of production (at least one) are fixed and…

Q: 3. Explain the macroeconomic policy debate using AD-AS Diagram.<

A: Macroeconomic policy disputes usually center on fluctuations in the economy's important aggregate…

Q: 1. a) Construct the AD-AS model showing AD, short run AS and long run AS intersecting at the…

Q: An important assumption in the AD/AS macro model is that when real GDP exceeds potential output,…

A: Aggregate demand or AD is the total demand of all the goods and services that are produced in the…

Q: What is the Classical Dichotomy, and how is it explained with AS and AD diagram and concepts?

A: Classical Dichotomy is explained as when the changes in the quantity of money occurs, it only…

Q: Discuss the main ideas for the Real Business Cycle (RBC) Revolution and the New Keynesian (NK)…

A: The real-business-cycle hypothesis believes that the economy's ability to transform inputs into…

Q: Keynesian transmission mechanism is direct in nature. O True O False

A: The monetary transmission mechanism is the process by which monetary policy decisions affect the…

Q: Is fiscal policy, say an increase in government expenditures (G), effective according to the Real…

A: Real Business Cycle Theory states that business cycle phases recession, depression, recovery are…

Q: Evidence indicates that a recession occurs at about the same time as a decrease in investment.…

A: The real business cycle theory is one of the approaches to understand the business cycle in an…

Q: Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes…

A: 1.2 The Hayek’s classical model illustrates the aggregate supply curve as a vertical straight line…

Q: Mexico is experiencing a Recession due to decrease demand. Draw a correcly labeled AS/AD model…

A: Mexico is experiencing a recession due to decrease in demand. Therefore the Aggregate demand will…

Q: The imaginary country of Harris Island has theaggregate supply and aggregate demand curves as…

A: "Since you have posted a question with multiple sub-parts ,we will solve first three subparts for…

Q: What are the key ideas of the real business cycle model? How does it explain business cycle…

A: The real business cycle theory makes the fundamental assumption that an economy witnesses all these…

Q: Question 3 (Equilibrium) Since the Covid-19 crisis is nearing an end, the government is planning to…

A: Ever since the pandemic started it has not just affected the physical health of the people but has…

Q: 6.1. What is an AD-AS model and what does such a model as per the given diagram essentially focus…

A: Since you have asked a multi-part question and according to the policy, we can only solve the first…

Q: What, precisely, are the two shocks? (For the purpose of this question,let’s ignore the signifcant…

A: The aggregate supply refers to the total amount of all the goods, and services supplied in an…

Q: The purpose is to know if you can define each concept through a clear and precise explanation.…

A: 1. deficit The deficit can be understood as a shortage or lack of something because the cost is…

Q: The macroeconomy is depicted by the graph to the right 160- a. The current equilibrium price level…

A: Equilibrium price level is 80.

Q: b. Why do some people say thát inflation is a tax? Who pays that tax? Whg collects that tax? How…

A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…

Q: b) What differences emerge between Keynesian and Classical economists regarding understanding the…

A: The classical school of thought proposed the theory of market economies which viewed a free market…

Q: Suppose that you have an AEF at a price level of p = $100 given by: AEF = 1,200+ 0.40Y Suppose also…

A: The price level influences the autonomous component of the aggregate expenditure function. It causes…

Q: Que a) To what extent has the time-inconsistency problem influenced the formation and practical…

A: Time inconsistency is a problem that arises when policymaker follows one policy in advance but later…

Question

ASAP

Branch of economics that analyzes the behavior and performance of an economy as a whole. It focuses on the study of aggregates and evaluates changes related to unemployment, gross domestic product, inflation, monetary and fiscal policies of the government.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

How is long-term growth illustrated in an AD/AS model?
How do proponents of Real Business Cycle Theory explain thebusiness cycle, and why do they object to government intervention tosmooth the business cycle?
Discuss the key problem associated with the Real Business Cycle model. How can this problem be addressed?
6.1.What is an AD-AS model and what does such a model as per the givendiagram essentially focus on?6.2.Discuss the diagram in detail by first explaining what leads to step Step 1(representing a shift in curves on the diagram) and indicating what occursto cause shifts in some of the curves. Then discuss Step 2 (whichrepresents other macroeconomic changes) and indicate what happens toother variables when there are shifts in some of the curves as per Step 1. 6.3.What, in general, do the points of intersection between the AS and AS2curves and the AD curve show?6.4.When the LAS curve moves to the right to LRAS2, what exactly do thepoints of intersection between the AS and AS curves and the AD1 curve,indicated as point 1 and point 2, reflect on the diagram?
Are TFP shocks a reasonable explanation for the business cycles Are TFP shocks a reasonable explanation for the business cycles we see in modern economies? Why and why not? Are TFP shocks a reasonable explanation for the business cycles
1) Identify key assumption underlying Keynesian and Classical approaches to macroeconomic analysis. In your answer indentify how Keynesian and CLassical economist differ regarding understandign about the business cycle and how the economy should best be managed ?
Discuss, one (1) macroeconomic policy measure used by policymakers during a periods of recession. (NB: state date(s), action(s), value, etc.)
What are the key ideas of the real business cycle model? How does it explainbusiness cycle fluctuations? Explain in details with the help of graphs.
How do the long-run model and the short-run model ft together? What isthe purpose of each model?
list four differences between new keynesian and real business cycle models?
The long run macroeconomic performance of an economy can be reflectedfrom the changes of her major macroeconomic indicators. With appropriateinterpretations of the changes to these indicators, one can identify the inherentstructural features of an economy, and hence, identify her strengths andweaknesses. In about 250 words, write a short essay on ONE economy from the list below:i. Singapore;ii. The United Kingdom;iii. The United States.In your essay, describe the changes of major macroeconomic indicators fromthe last decade. Using them to illustrate major structural features of the choseneconomy. Based on the above, identify ONE inherent problem implied bythese structural features that might limit her macroeconomic performance inthe long run. Suggest ONE practical government policy in dealing with thisinherent problem.
Explain the differences and similarities between Neoclassical Growth and New Keynesian models based on:1. Economic Actors2. Assumption of Market Type