CH.12 #3 CH.13 #1 and #5 From the book Macroeconomics by Williamson, Pearson edi
ID: 1176561 • Letter: C
Question
CH.12 #3
CH.13 #1 and #5
From the book Macroeconomics by Williamson, Pearson edition
In the real business cycle model, suppose that firms become infected with optimism and the expect total factor productivity will be much higher in the future. Determine the equilibrium effects. If waves of optimism and pessimism of this sort cause GDP to fluctuate, does this model explain the key business cycle facts? Suppose the monetary authority wants to stabilize the price level in the face of optimism. Determine what it should do, and explain. Suppose government spending increases temporarily in the New Keynesian model. What are the effects on real output, consumption, investment, the price level, employment, and the real wage? Are these effects consistent with the key business cycle facts? What does this say about the ability of government spending shocks to explain business cycles? Some macroeconomists have argued that it would be beneficial for the government to run a deficit when the economy is in a recession, and a surplus during a boom. Does this make sense Carefully explain why or why not using the New Keynesian model.Explanation / Answer
do i just answer #3???