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29 Cards in this Set
- Front
- Back
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The behavior of the Solow residual suggests that when current total factor productivity increases
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future total factor productivity is also likely to increase
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In the real business cycle model, a persistent increase in total factor productivity
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increases the real wage and decreases the price level
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According to real business cycle theorists, an increase in total factor productivity could lead to an increase in the nominal money supply due to
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the Federal Reserve's attempts to stabilize the price level and banking sector expansion of deposit money
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An important critique of real business cycle theory is the belief that cyclical movements in total factor productivity
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may, in part, be an artifact of measurement error
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An important critique of real business cycle theory is the belief that cyclical movements in total factor productivity
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may, in part, be an artifact of measurement error
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The liquidity effect is
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the decrease of the interest rate in response to an increase in the money supply
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In the segmented markets model, liquidity demand needs to be modified to take into account that
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households and firms form expectations about the money market before they take decisions
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In the segmented markets model, the central bank can have an impact on real aggregates because
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it can fool households and firms
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A Keynesian model that is consistent with fully flexible wages and prices is based upon the notion of
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coordination failures
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In the coordination failure model, the most likely explanation of business cycles are
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fluctuations between good and bad equilibriu
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An increase in the current price level shifts the
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LM curve to the left.
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When wages are sticky and there are only shocks to the money supply, money is
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procyclical
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When wages are sticky and there are only shocks to the money supply, real wages are
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counter-cyclical
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A classical objection to Keynesian sticky price models is that
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it is easier for firms to change prices rather than change output.
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The behavior of the U.S. unemployment rate over the period from 1970 through the 1990s can be characterized as
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an upward trend from 1970 through the mid-1980s followed by a downward trend for the remainder of the period.
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Which is not a key determinant of the unemployment rate?
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long-term money supply
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Over the last half of the twentieth century in the United States, the participation
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rate of women has increased and the participation rate of men has decreased.
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Over the last half of the twentieth century, percentage deviations from trend in the size of the U.S. labor force have been
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procyclical and have been smaller than the percentage deviations from trend in real GDP.
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In the labor search model, the welfare of an employed worker increases when the separation rate
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decreases and the tax rate on wage income decreases.
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The reservation wage is
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the minimum wage offer that an unemployed worker would be willing to accept.
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In the labor search model, an increase in the job offer rate is likely to directly increase the flow of individuals from unemployment to employment and also indirectly
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decrease the flow of individuals from unemployment to employment due to a higher reservation wage.
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Adverse selection considerations suggest that paying a higher real wage
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attracts workers with higher abilities.
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Moral hazard considerations suggest that paying a higher real wage
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reduces the likelihood that its workers will shirk.
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In the efficiency wage model, there can be equilibrium unemployment because
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it is inefficient for employers to reduce the real wage rate, even if there is an excess supply of labor.
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The LM curve is upward-sloping because
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Money demand is positively-related to real output and negatively-related to the real interest rate.
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The equililibrium effect of a prospective future increase in total factor productivity include
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a decrease in the real wage and an increase in the real interest rate
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what CAN happen to money demand if ATM's become more plentiful
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In this case it is POSSIBLE that by reducing resource expenditure on visiting the bank, there are more resources allocated to things that require cash, and so Money Demand rises.
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With money supply shocks in the intertemporal model with money, the price level is
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acyclical
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In the RBC model, a persistent increase in TFP has
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a theoretically ambiguous impact on the real interest rate.
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