The First DSGE Models Were Called ________ Models and Used

question 60

Multiple Choice

The first DSGE models were called ________ models and used the ________ to study macroeconomic fluctuations.

• A) monetary; quantity theory of money
• B) Keynesian; IS/MP model
• C) island; Robinson Crusoe model
• D) real business cycle; Solow model
• E) altruism; overlapping generations model

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Definitions:

Real Variable

A variable, such as income or output, that has been adjusted for inflation, reflecting true purchasing power.

Recession

A period of temporary economic decline during which trade and industrial activities are reduced, generally identified by a fall in GDP in two successive quarters.

Net Exports

The value of a country's total exports minus the value of its total imports, representing a component of a nation's GDP.

Short Run

A period in which at least one input is fixed, limiting the ability of a firm to adjust all of its inputs to change output.