Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 15, Problem 3RQ
To determine
Role of TFP shocks in explaining business cycles.
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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
list four differences between new keynesian and real business cycle models?
Which of the following is not one of the possible general sources of shocks that can cause business cycles?
Select one:
a. Open market operations to of businesses to increase their global competition.
b. Unexpected political events, such as peace treaties, new wars, or terrorist attacks, can create economic opportunities or strains.
c. When productivity unexpectedly increases, the economy booms; when productivity unexpectedly decreases, the economy recedes.
d. Irregular innovations may contribute to the variability of economic activity.
Chapter 15 Solutions
Macroeconomics (Fourth Edition)
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- To what degree are fluctuations in the business cyclepredictable?arrow_forwardIs re-shoring the best approach to deal with shocks like Covid-19 or similar events in the United States? and why?arrow_forwardDraw and properly label an AD-AS model to show Keynesian, intermediate, and neoclassical zones. Then, briefly explain the levels of unemployment, inflation, and real GDP in each zone, and confirm whether or not goals of a macro economy are being achieved in each zone.arrow_forward
- Assess the view that when an economy experiences a negative economic shock there willalways be a sustained increase in unemployment.arrow_forwardWhat are supply shocks? Why are policy choices hard when there are negative supply shocks? Would you model the pandemic of 2020 as a supply shock or a demand shock? Why?arrow_forwardWhy do temporary negative supply shocks pose adilemma for policymakers?arrow_forward
- Explain why a supply shocks is most of the time believed to be temporary? And does not result in government requiring to do any special policy to rectify the problem.arrow_forwardIn the basic real business cycle model, where prices are fully flexible, shocks to the dynamic aggregate demand always lead to: I. changes in real GDP. II. changes in inflation. III. changes in spending growth. A) I only B) I and III only C) II only D) I, II, and III E) II and III only F) None of the abovearrow_forwardExplain how the real business cycle model can explain why the price level is countercyclical at some times, and uncorrelated with output at other times.arrow_forward
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