SOLVED

15.5Â Â Appendix:Â Macroeconomic Schools of Thought 1) Which of the following models relies on emphasizing the importance of sticky wages and prices? A) the monetarist model B) the new classical model C) the real business cycle model D) the new Keynesian model 2) The new classical model has as its central idea that A) wage and price stickiness explains fluctuations in real GDP. B) workers and firms have rational expectations. C) the Federal Reserve should adopt a monetary growth rule. D) shifts in aggregate demand have no impact on real GDP. 3) Which of the following models advocate that the quantity of money should be increased at a constant rate? A) the monetarist model B) the new classical model C) the real business cycle model D) the new Keynesian model 4) The real business cycle model focuses on how A) wage and price stickiness explains fluctuations in real GDP. B) the labor theory of value is the best measure of value of a good or service. C) the Federal Reserve should adopt a monetary growth rule. D) productivity shocks explain fluctuations in real GDP 5) Proponents of the real business cycle model argue that the short-run aggregate supply curve is A) flat. B) positively sloped. C) vertical. D) negatively sloped. 6) According to the real business cycle model, ________ in aggregate demand ________ GDP. A) increases; decrease B) increases; increase C) increases; do not affect D) decreases; increase 7) If workers and firms have rational expectations, they form their expectations using A) all the information available to them. B) only information from the past. C) only information provided to them by the government. D) only information gathered from random sources. 8) The proponents of ________ and ________ think that the Federal Reserve should adopt a constant monetary growth rule. A) new Keynesianism; the new classical model B) the real business cycle model; Marxism C) rational expectations; monetarism D) the monetarist model; the Keynesian model 9) According to Marx, which of the following factors of production did not contribute anything of value to production? A) labor B) capital C) natural resources D) entrepreneurship 10) Monetarism is a school of thought put forth by ________, who argued that the economy would most likely be at potential GDP. A) Karl Marx B) Milton Friedman C) Finn Kydland and Edward Prescott D) Robert Lucas and Thomas Sargent