ECO 302 Chapter 10:Business Cycles in the Classical Model
Teacher: Professor Glenda Evans
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Across
The main disagreements about the causes and cures of recessions are be-
tween two broad groups of macroeconomists.....name one
Changes in the tax laws can also have real effects on the economy in the ________ model
Occurs when firms retain some workers in a recession
that they would otherwise lay off
One business cycle fact according to the RBC theory is that average labor
productivity is _________
shocks to money supply
or money demand
This theory argues that real shocks to the economy are the primary cause of business cycles
shocks
that affect the production function, the size of the labor force, or the real quantity
of government purchases
another name for productivity shocks
Some economists have questioned whether the Solow residual
should be interpreted solely as a measure of ______________
Down
Another type of shock that can be a source of business cycles in the classical
model such as an increase or decrease in government spending
The ____________ rate of a factor
measures the intensity at which it is being used
an adverse productivity shock raises the real interest rate, depresses
consumption and investment, and raises the __________
The
most common measure of productivity shocks
the type of real shocks contributing to the business cycle that play the largest role
Some classical economists suggest that differences among workers and
among jobs explain not only why the _________ rate is always greater than
zero
Measured productivity can vary, even if the actual tech-
nology used in production doesn’t change, we recognize capital and
_____ sometimes are used more intensively
according to the
classical analysis, a(n)___________ in government purchases should lead to an increase in aggregate labor supply
According to the RBC approach, periods of
recession should also be periods of ___________
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