Dynamic Stochastic General Equilibrium (DSGE)models are models that allow analysis of
A)productivity shocks only.
B)productivity as well other shocks that have impacts on the economy.
C)fiscal policy shocks only.
D)monetary policy shocks only.

Question

Quizplus · Accepted Answer

DSGE models allow analysis of productivity shocks as well as other shocks that have impacts on the economy, such as fiscal policy and monetary policy shocks. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect as they only consider one type of shock, whereas DSGE models consider multiple shocks.

Dynamic Stochastic General Equilibrium (DSGE)models Are Models That Allow Analysis