Start Discovering Solved Questions and Your Course Assignments
TextBooks Included
Active Tutors
Asked Questions
Answered Questions
Do you observe a Phillips curve relation in the data? What if you confine attention to particular sub-periods? Discuss.
What causes deficient financial liquidity? Which is the better macro model, the real business cycle model or the coordination failure model? Explain.
Describe an example of a coordination failure problem. What causes business cycles in the coordination failure model?
Should the government act to stabilize output in the real business cycle model? What are the important shortcomings of the real business cycle model?
Why is money neutral in the real business cycle model? How can the real business cycle model explain the behavior of the money supply over the business cycle?
Why is it useful to study different models of the business cycle? What causes output to fluctuate in the real business cycle model?
Plot rates of growth in M1 and in real GDP. What do you see in your chart? Can you make sense of what you see by using the theory developed in this chapter?
Suppose that money plays the role of a sunspot variable in the coordination failure. Explain what the monetary authority could do to make consumers better off.
Determine the effects on aggregate variables in the good equilibrium and in the bad equilibrium, and explain your results.
What should the central bank do in response to the natural disaster? Explain with the aid of diagrams.
How would central bank respond if it believed that GDP dropped because of decline in total factor productivity and that real business cycle theory is correct?
What could determine what fiscal and monetary policy settings are actually used in this context? Discuss.
Determine the effects on real output, the real interest rate, the price level, employment, and the real wage if government did nothing in response to shock.
What are the effects on real output, consumption, investment, the price level, employment, and the real wage?
Suppose, in New Monetarist model, that there is deficient financial liquidity. What does this say about Ricardian equivalence in New Monetarist model? Discuss.
Why would any financial institution lend at less than 0.25% to another financial institution if could lend to the Fed at 0.25%?
Are Keynesian business cycle models still used? If so, what for? Which markets clear in the New Keynesian model, and which do not?
How is monetary policy determined in the New Keynesian model? What is the central bank's target, and what does the central bank control directly?
What happens in the long run in the New Keynesian model? How do Keynesians justify intervention in the economy through monetary and fiscal policy?
Explain the differences in how the New Keynesian model and the real business cycle model respond to changes in total factor productivity.
What are the faults of the New Keynesian model? In the New Keynesian model, does a liquidity trap imply that no economic policy can close a positive output gap?
Some macroeconomists have argued that it would be beneficial for the government to run. Carefully explain why or why not, using the New Keynesian model.
What would the macroeconomic effects be? Does it matter if there is a liquidity trap where excess reserves are held in the financial system?
Plot the percentage changes in quarterly real GDP and in quarterly M2. Is there tendency for changes in M2 to precede changes in the same direction in real GDP?
Plot monthly percentage changes in the consumer price index, and in the Standard and Poor's stock price index.