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:

Latency Stage

A psychoanalytic term for a period in child development from about age five to puberty during which sexual urges are inactive.

Biological Drives

Innate impulses in living organisms that prompt certain behaviors essential for survival, such as hunger, thirst, and reproduction.

Unconscious

The part of the mind that is inaccessible to the conscious mind but that affects behavior and emotions.

Id

In psychoanalytic theory, the part of the personality that is the source of instinctual impulses and demands immediate satisfaction.