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Question : 1) evaluate the following statement. "Government expenses acyclical. Thus, increasing

1) evaluate the following statement. "Government expenses is acyclical. Thus, increasing the level of government expenditures in recessions should not be used as a policy to boost output." (select all that apply)

a. i agree -

b. i disagree,even though higher government expenditures doesn't not stimulate output, it can help the economy in other ways.

c. i disagree, since government expenditures typically rise in recessions, the lack of historical correlation between gov. expenses and output doesn't mean that there is no causal relationship between them.

d. i disagree. An increase in the gov. expenses may stimulate output despite the lack of correlation. there are may other factors, in addition to government expenses, that may impact the output.

2) which of the following stylized facts should we aim to replicate in ONE-PERIOD macro-model( select all correct answers)

a-consumption is procyclical.

b-consumption is less volatile than output.

c-investment is procyclical.

d-employment is procyclicale- employment is lagging.

f- labor productivity is procyclical

 

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