If There Are Total Factor Productivity Shocks in the New

question 81

Multiple Choice

If there are total factor productivity shocks in the New Keynesian model, and the central bank always reduces the output gap to zero

• A)the New Keynesian model will produce the same data as the real business cycle model only if the central bank pegs the price level in the real business cycle model.
• B)the New Keynesian model will produce the same data as the real business cycle model.
• C)average labour productivity is countercyclical.
• D)employment is constant.
• E)employment is countercyclical.

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Definitions:

Net Cash Flows

The difference between cash inflows and outflows in a company over a specific period, indicating the net change in cash and cash equivalents.

Operating Activities

These are the day-to-day actions involved in running a business, which include generating revenue, incurring expenses, and producing the fundamental cash flows of the business.

Indirect Method

A way of reporting cash flows from operating activities by starting with net income and adjusting for changes in non-cash accounts.

Operating Cash Receipts

Operating cash receipts are the cash inflows related to a company's primary business operations, such as cash received from selling products or services.