Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 3AP
To determine
To Evaluate: Effects on different economic variable under different condition using IS-LM model.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose you are interested in isolating the cyclical component of a macroeconomic time series (such as GDP ).
Give at least one reason why assuming a non linear trend would be preferable than assuming a linear trend.
Explain how the real business cycle model can explain why the price level is countercyclical at some times, and uncorrelated with output at other times.
According to the real business cycle theory, productivity shocks are an important source of business cycles. Using the Cobb–Douglas production function and annual data since 1961, calculate and graph U.S. total factor productivity. Use real GDP for Y, the capital stock from the source listed in Table 3.1 for K, and civilian employment for N. Look for periods marked by sharp changes up or down in productivity. How well do these changes match up with the dates of business cycle peaks and troughs?
Knowledge Booster
Similar questions
- How is cyclical unemployment illustrated in an AD/AS model?arrow_forwardAccording to the Real Business Cycle theory, a) Business cycles are originated by changes in real wages b) Business cycles are originated by productivity shocks c) Business cycles are originated by demand fluctuations d) Business cycles are originated by the real demand for moneyarrow_forwardWhich of the following are business cycle theories that regard fluctuations in aggregate demand as the factor that is creating business cycles? I. Keynesian cycle theory II. real business cycle theory III. monetarist cycle theoryarrow_forward
- ASAP 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?arrow_forwardExplain the basic arguments stated by the Real-Business-Cycle (RBC) Theory, regarding economic fluctuations.arrow_forwardWhat is the intertemporal substitution hypothesis? Does this argument provide a convincing account of the cyclical trend in the unemployment rate?arrow_forward
- One criticism of the real business of the real business cycle theory is that the intertemoptal substitution effect if too weak to account for large fluctuations in the employment True Falsearrow_forwardEmpirical studies indicate that the long-run trend in real GDP of the USA has an upward trend. How is this possible given business cycles and macroeconomic fluctuations? What factors explain the upward trend in spite of the cyclesarrow_forwardHow do Classical economists and Keynesian economists differ in their perceptions of how well markets and prices function? List and briefly explain the nature and functions of three market arenas. Which are the four components of the macroeconomy? Explain the interaction between these components through a circular flow diagram. Draw a graph of a business cycle. Label and explain each phase of the business cycle. Define the following concepts: Sticky Prices Expansion and contraction Inflation, Deflation and Hyperinflation Fiscal Policy and Monetary Policyarrow_forward
- According to the Austrian theory of the business cycle, the following is false A. A cluster of sudden errors by previously successful entrepreneurs is revealed by the recession B. Overall prices always fall during a recession C. An inflationary boom is inevitably followed by a recession D. The prices of consumer goods rise relative to the prices of capital goods during the recessionarrow_forwardAccording to the Austrian business cycle theory, a key feature of a deflationary depression is A) an increase in money and credit B) unrepayable debts lead to financial system losses C) businesses that are too big to fail must be subsidized D) higher pricesarrow_forwardExplain the Real-Business-Cycle (RBC) Theory, regarding economic fluctuations.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax