Question: Question 1. Agree or disagree? (40 points) Consider four out of the six statements below.1 Do you agree or disagree? Explain your answers. (a) In

Question 1. Agree or disagree? (40 points) Consider four out of the six statements below.1 Do you agree or disagree? Explain your answers. (a) In the Real Business Cycle model, wages correlate perfectly with labour productivity. (b) If the Blanchard-Kahn conditions are violated, then there is no stable equilibrium. (c) In a model with risk-averse agents and constant consumption growth, there is no equity premium, according to the equity premium formula derived by Mehra and Prescott. (d) The Diamond-Mortensen-Pissarides model is consistent with constant wages, even when there are shocks. (e) The Frisch elasticity of labour supply captures only the substitution effect of a wage change. (f) The Kaldor growth facts imply that, on average, wages grow at the same rate as labour productivity.

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