In the Smets-Wouters DSGE Model, a Positive TFP Shock Has

question 38

Multiple Choice

In the Smets-Wouters DSGE model, a positive TFP shock has an immediate ________ but ________.

• A) negative impact on hours worked; they start to rise after six quarters
• B) positive impact on real GDP; growth is negative in the longer run
• C) positive impact on inflation; leads to deflation later
• D) effect on unemployment; hours worked per worker remains the same
• E) negative impact on consumption; consumption grows later, as predicted by the permanent-income hypothesis

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Definitions:

Hippocampus

A component of the brain's limbic system, crucial for memory formation and spatial navigation.

Temporal Lobe

A region of the cerebral cortex located beneath the lateral fissure on both cerebral hemispheres of the mammalian brain, involved in processing auditory information and encoding memory.

Memory Functions

The cognitive processes involved in storing, retaining, and recalling information.

Cerebrum

The largest part of the brain, responsible for various higher functions such as thought, action, memory, and emotion.