In the Smets-Wouters DSGE Model, a Negative TFP Shock Will

question 28

Multiple Choice

In the Smets-Wouters DSGE model, a negative TFP shock will cause real GDP to ________ by ________.

• A) fall; more than the decline in the shock
• B) rise; more than predicted by empirical models
• C) not change; Okun's law
• D) fall; less than consumption
• E) fall; the same as the decline in inflation

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Definitions:

Flooding

A psychological treatment method where individuals are exposed to a vast amount of the fearful stimulus until the fear diminishes.

Programmed Learning

An educational technique involving self-teaching with the use of specially prepared instructional materials and a step-by-step sequence that allows for self-paced learning.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, encouraging the repetition of desired behaviors and discouraging those that are undesirable.

Systematic Desensitization

A therapeutic process intended to reduce a person’s fear or anxiety towards a particular object or situation by gradually increasing exposure while using relaxation techniques.