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Understanding Macroeconomic Models Quiz

Test your knowledge of macroeconomic concepts with this comprehensive quiz focused on key elements of neo-Keynesian and real cycle models. Perfect for students and enthusiasts, this quiz challenges you with ten carefully crafted questions that cover various aspects of these economic theories.

Whether you're preparing for an exam or just want to gauge your understanding, this quiz is a great way to:

Enhance your macroeconomic knowledge
Challenge yourself with complex concepts
Learn through multiple-choice questions

10 Questions2 MinutesCreated by AnalyzingEagle320

Choose the correct answer within the framework of the neo Keynesian model:

- The higher the percentage of firms that can set prices optimally in each period, the greater the effect of a demand shock on the output gap

- None of the answers is correct

- Faced with a shock that increases the business costs, the CB can simulataneously achieve both objectives (inflation and output gap) by setting the interest rate equal to the natural interest rate

- A positive demand shock will affect the marginal cost of a sticky price economy, but not that of a economy with flexible prices

A model of real cycles:

- Is capable of generating a positive correlation between output and prices

- Is capable of generating a positive correlation between real wages and employment

- Generates a negative correlation between investment and output

- Generates a dynamic for consumption to that of output

Assume a real cycle model with a tech shock on the production function. This model will generate persistence in the real variables:

- Whenever the economy receives a positive or negative tech shock

- Only if depreciation is equal to 1

- Only if the tech shock follows an AR(1) process

- None of the answers is correct

Following the announcement of an anticipated permanent negative shock to the supply, a real cycle model with money will predict that:

- Output employment, real wages, consumption, investment and capital stock increase, while prices and nominal wages decrese

- Output employment, real wages, consumption, investment and capital stock do not move, and neither does nominal interest rate in t

- None of answers are correct

- Output employment, real wages, consumption, investment and capital stock remain unchanged, while the interest rate nominal decrease in t.

In the real cycle model:

The IS is dynamic

- Agents make decisions based on static expectations

- The labor market generates involuntary unemployment

- Monetary policies are adequate to stabilize the business cycle

According to the canonical neo Keynesian model that includes a taylor rule

- Money is neutral in the short term

- A shock that reduces the demand for money today will increase inflation today

- None of the answers are correct

- It is not possible to ecplain a positive correlation between inflation and output

In the hyperinflation model, an unanticipated and permanent increase of 1% in the money supply

Increase output by 1% immediately, and leaves prices unchanged

- Increase prices by 1% immediately ,and leave nominal interest rate unchanged

- Today increases prices by 1% and increases the nominal interest rate

- Increase prices by 1% on t+1 but not in t

In the canonical neo Keynes model, an expected negative tech shock for t+1:

- Increases the output gap at t+1, increasing inflation at t

- The output gap decreases at t+1 and therefore inflation t

- Leave inflation unchanged at t

- The output gap decreases at t+1, and therefore inflation at t+1 but not at t

In the hyperinflation model, an unanticipated transitory increase of 5% in the quantity of money at t:

- Increase prices by t less than 5%

- Increase prices by more than 5%

- The nominal interest rate increases in t

- The real interest rate increases in t

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Understanding Macroeconomic Models Quiz

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