A new technological innovation comes on line. What are the current effects on aggregate output, consumption, investment, employment, the real wage, the real interest rate, the nominal interest rate, and the price level? Explain your results. Also explain how they fit the key business cycle facts in Chapter.
Answer to relevant QuestionsSuppose, in the Friedman-Lucas money surprise model, that there are money demand shocks and shocks to total factor productivity. Neither private sector economic agents nor the central bank can observe money demand shocks ...Suppose that temporary increases in government spending lead to permanent increases in total factor productivity, perhaps because some government spending improves infrastructure and makes private firms more productive. Show ...In the New Monetarist model, suppose that the central bank conducted a "quantitative easing" program by issuing outside money and exchanging it for privately produced liquid financial assets. What would the macroeconomic ...In the New Keynesian model, suppose that in the short run the central bank cannot observe aggregate output or the shocks that hit the economy. However, the central bank would like to come as close as possible to economic ...Suppose, in the second model in this chapter, with production and investment, that there is an increase in credit market frictions, as studied in Chapter. What are the effects on aggregate output and the current account ...
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