Macro Feb 2024

According to neoclassical economists, potential income

• is affected by changes in the income multiplier

• is influenced by the deep parameters

• is influenced by the money supply

• depends upon the level of aggregate demand

• is affected by the velocity of circulation of money

According to Deaton, for Chicago economists

• Arrow correctly concluded that private markets should not be used to provide health

  care

• equality does not necessarily come sharply into conflict with freedom;

• markets could not fail

• any attempt to address market failures would only make things worse.

• Arrow’s theorems were wrong

According to. Summers's 2013 secular stagnation hypothesis

• the natural rate of interest was lower than zero

• the zero lower bound could not occur

• the key problem is that the supply side did not generate enough income

• inflation was too high to balance saving and investment

• The solution to slow growth was expansionary monetary policy of the Fed.

According to rational expectations

• government is able to predict the effects of policies

• people can be fooled most of the times

• agents' expectations are formed on the grounds of all past events

• agents' expectations are formed in such a way that no mistakes are possible

• agents' expectations are formed on the grounds of all available information

Consider the Chief Economists Outlook published in January 2024 by the World

Economic Forum.

• Trade within allied blocs of nations has decreased up to 56% in the period 2019-2023

• Trade has increased by 16% in 2023 thanks to joint world industrial policies of

  Governments

• World trade has increased by 7% since 2015, thanks to trade restrictions

• Global trade has declined by 5% in 2023

• None of the above

The Ulysses metaphor suggests

• the view that frictions impair the smooth working of markets

• that the economy may not be self-adjusting

• the view that when shocks hit the economy, they can be absorbed by suitable price

  changes

• actual output is always equal to potential output

• the view that supply creates its one demand

The Arrow Debreu model implies

• the existence of a complete set of markets

• that expectations are rational

• money plays an important role

• the device of the representative agent

• that there may be unsold inventories for some goods

According to Buiter,

• demographics and productivity explain low real interest rates for the last 700 years

• what matters is that real interest rates be higher than real GDP growth

• the thesis held by Rogoff, Rossi and Schmelhzing on determinants of real interest rate

  is wrong

• the drivers of real interest rates are poorly understood

• Summers' secular stagnation hypothesis makes sense

According to. Stiglitz, what is (are) the cause(s) of the big rise in inflation

• A shock in the demand of energy, at all levels

• An increase in the money supply by Central Banks worldwide.

• A shock in demand for goods only, especially in consumption goods

• A main supply shock in energy, together with sectoral demand shocks.

• A decrease in the supply of goods, during the Covid phase

According to Blanchard: "There may be no variable more important for macroeconomic

policy than...

• the difference between the nominal interest rate and the growth rate

• the difference between the real interest rate and growth rate

• the difference between the increase in the money supply and the growth rate

• the difference between Gross investment and depreciation

• the difference between between the real interest rate and inflation