Question from Past Macroeconomics Qualifying Exam (Spring, 2003 - Question six) at George Mason UniversityEdit
What would the aggregative properties of a ‘well-working’ market economy look like as it moved through time? Would a plot of the time series of aggregate variables be smooth (as illustrated by trend stationarity) or jagged (as illustrated by a random walk with drift)? Would a downturn in some aggregate variable indicate some type of coordination failure, or is it a normal feature of a well-working economy? Describe, using simple models, how different macroeconomic schools have approached this matter of the performance properties of a well-working market economy. Comment on the resulting implications for the common disjunction between growth and cycles in macroeconomic theorizing.