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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To what degree are fluctuations in the business cyclepredictable?
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
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?
Chapter 15 Solutions
Macroeconomics (Fourth Edition)
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- Empirical 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 despite the cycles?arrow_forwardWhy does a business cycle serve as a forecasting modelarrow_forwardWhy do economists and managers pay attention to the measurements of macroeconomic activity?arrow_forward
- When an economy dips into a recession, consumers will often be relatively pessimistic about the future for an extended period time. How will this pesimism affect the speed and strength of the recovery?arrow_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_forwardWhy, in general, do shocks force people to make changes? Give at least two examples from your own experience.arrow_forward
- list four differences between new keynesian and real business cycle models?arrow_forwardDiscuss the key problem associated with the Real Business Cycle model. How can this problem be addressed?arrow_forwardWhich 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.arrow_forward
- How do changes in consumer spending patterns impact the accuracy of short-term economic forecasting models?arrow_forwardThere are two theories regarding the cause of recessions. Between the two, which one contributes more to it? Explain thoroughly. Provide examples when necessary.arrow_forwardRussia’s invasion of Ukraine is causing energy prices to soar in the euro area (at an annual rate of 39% according to the Economist, June 2022). (1.a) What kind of economic shock is this for the euro area (AD or AS; positive or negative)? Use the AD/AS model to predict the effects of this shock on euro area output, prices, employment, and unemployment. Does it matter whether the shock is permanent or temporary? How must fiscal policy respond if the government’s target is price stability? How will this policy change your answer about prices, employment, and unemployment? Include the AD/AS graparrow_forward
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