Part 1 - Introduction

Question 1

Gross Domestic Product (GDP):

BIP

Answer 1

Quantity of goods and services
produced within a country’s borders over a particular
period of time.

Question 2

Natural Logarithm of Per Capita Real GDP

Answer 2

Uses Log because the Log can directly interpretet as growth rate

Question 3

Business cycle theories can be separated into two groups:

Answer 3

Keynesian and non-Keynesian.

Question 4

Old Keynesian models:

Answer 4

• Wages and prices are sticky in the short-run and hence, do not change quickly enough to yield efficient outcomes.
• Government intervention, i.e., monetary and fiscal policy, can correct these inefficiencies.

Question 5

Real business cycle theory:

Answer 5

Government policy aimed at smoothing business cycles is ineffective or even detrimental

Question 6

New Keynesian Models:

Answer 6

Microfounded models with sticky

wages and prices