Question

Consider the Real Business Cycle Model studied in class. The
equilibrium effects of a future increase in total factor
productivity (z' using the notation in class) include:

a).an increase in the real wage and an increase in the real
interest rate.

b).an increase in the real wage and a decrease in the real
interest rate.

c).a decrease in the real wage and an increase in the real
interest rate.

d).a decrease in the real wage and a decrease in the real
interest rate.

Answer #1

The correct option is c).a decrease in the real wage and an increase in the real interest rate..

Consider the Real Business Cycle Model studied in class. The
equilibrium effects of a future increase in total factor
productivity (z' using the notation in class) include: **c).a decrease in the real wage
and an increase in the real interest rate.**

Consider the Real Business Cycle Model studied in class. The
equilibrium effects of a future increase in total factor
productivity (z' using the notation in class) include:
a decrease in the real wage and a decrease in the real interest
rate.
an increase in the real wage and a decrease in the real interest
rate.
a decrease in the real wage and an increase in the real interest
rate.
an increase in the real wage and an increase in the...

Consider the Real Business Cycle Model studied in class. The
equilibrium effects of a future increase in total factor
productivity (z' using the notation in class) include:
an increase in the real wage and an increase in the real
interest rate.
an increase in the real wage and a decrease in the real interest
rate.
a decrease in the real wage and an increase in the real interest
rate.
a decrease in the real wage and a decrease in the...

Using the one-sided search model, show the effects of an
increase in the total factor productivity on the reservation wage
and on the long-run unemployment rate.

Compare the effects of a temporary and a permanent increase in
total factor
productivity on output, employment, real wage, real interest rate,
consumption
and investment.

According to the real
intertemporal model, suppose there is an increase in the current
capital stock. If so, we would expect
A.
real wages to rise and
real interest rates to fall.
B.
real wages to fall and real interest
rates to rise.
C.
real wages and real interest rates to
both rise.
D.
real wages and real interest rates to
both fall.
According to the real
intertemporal model, suppose there is a decrease in current total
factor productivity. If...

31. In "real business cycle theory", an expansion is caused
by
a. an increase in productivity.
b. an increase in employment.
c. an increase in ináation.
d. All of the above.

Assume the economy is initially in equilibrium, and then firms
expect future total factor productivity, z’, to decrease. Using the
New Keynesian Model framework, what are the implications on the
following: a) Output supply (increase / decrease / indeterminate /
no change)? b) Output demand (increase / decrease / indeterminate /
no change)? c) Labor supply (increase / decrease / indeterminate /
no change)? d) Labor demand (increase / decrease / indeterminate /
no change)? e) Money supply (increase /...

Answer the following questions about the effects of
total factor productivity shocks:
1. Imagine a decrease in total factor productivity (z) happens.
We want to explain the effects of this in the labor, asset, and
money markets. Determine the effects this shock will have on
output, investment, consumption, employment, real wage, real
interest rates, average labor productivity, and the price
level.
2. Do these movements in part 1 correspond to the actual
movement of economic variables during business cycles? In...

a. Consider the following long-run model:
Real GDP (Y) = 2,000; Consumption (C) = 300 + 0.6 (Y-T);
Investment (I) = 500 -30r where r is the real interest rate; Taxes
(T) = 450;
Government spending (G) = 400.
i. Compute consumption, private savings, public savings, national
savings, investment
and the real interest rate.
ii. Using the same model, except now C= 200 + 0.6(Y-T). Compute
consumption,
private savings, public savings, national savings, investment and
the real interest
rate.
iii....

2.Consider the inter-temporal model of consumption studied in
class, with two possible periods. Assume that initially that an
individual is a saver. If the interest rate rises, which statement
is false?
a. The individual will never become a borrower.
b.The individual will necessarily increase their savings.
c.The individual must remain a saver
d. The individual could increase or decrease their savings, but
she must remain a saver.
4. Consider the inter-temporal model of consumption studied in
class, with two possible...

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