Real business cycles 1. What causes recessions? 2. What are the major determinants of consumption expenditures? 3. How d

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Real Business Cycles 1 What Causes Recessions 2 What Are The Major Determinants Of Consumption Expenditures 3 How D 1 (137.37 KiB) Viewed 107 times

Real business cycles 1. What causes recessions? 2. What are the major determinants of consumption expenditures? 3. How does consumption behave over the business cycle? 4. How does consumption react to temporary increases in transfer payments or temporary reductions in personal taxes? 5. What are the major determinants of investment expenditures? 6. How does investment behave over the business cycle? 7. In a closed economy, what are the major determinants of real interest rates? 8. How does the real interest rate behave over the business cycle? Why? 9. How does the trade balance behave over the business cycle? 10. How do temporary increases in government purchases affect GDP? 11. What are some arguments against countercyclical fiscal policies? 12. Explain the role of intertemporal substitution of labor in the real business cycle theory.based upon this theory, would you expect the real wage to be procyclical orcountercyclical? (Hint: Think of labor productivity in the Robinson Crusoe example and the link between marginal productivity and the real wage.) 13. How does labor hoarding affect the Solow residual in a recession? 14. How does the presence of an aggregate-demand externality affect prices and output in the economy? 15. Is money neutral in the short run in a model of staggered wage and price setting? Is it neutral in the long run? Explain.