Author Question: Total factor productivity shocks are not a good explanation of economic fluctuations in the New ... (Read 24 times)

sheilaspns · **on:** Jun 30, 2018

Total factor productivity shocks are not a good explanation of economic fluctuations in the New Keynesian model for all the following reasons except

A) they do not generate output fluctuations.
B) employment drops when TFP increases.
C) the real wage drops when TFP increases.
D) they do not generate price fluctuations.

Question 2

Critics of real business cycle analysis suggest that the persuasiveness of the model may be limited by the existence of ________.

A) flexible wages and prices
B) rising wages
C) voluntary unemployment
D) labor hoarding