Critics of the So-Called DSGE Models Point Out That These

question 7

Multiple Choice

Critics of the so-called DSGE models point out that these models

• A)do not incorporate rational expectations
• B)assume that wages and prices adjust slowly so markets take a long time to clear
• C)ignore the fact that the economy can be hit by random shocks
• D)make the unrealistic assumption that people have a well-designed, long?term plan and can therefore adapt to unexpected shocks in a rational, consistent way
• E)all of the above

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Definitions:

Pension Accounting and Reporting

The process of recording and communicating information regarding a company's pension obligations and related costs in its financial statements.

Fund Asset Gains and Losses

Changes in the value of investment holdings in a fund that impact its overall performance.

Expected Rate of Return

The anticipated return on an investment over a specific period, taking into account both the risk of the investment and historical performance trends.

Operating Income

This refers to the profit a company generates from its normal business operations, excluding any income from investments or non-recurring expenses.