Which of the following features is/are frequently included in modern DSGE models?
i. Nominal rigidities
ii. Complete markets
iii. Homogeneity
A) i
B) ii and iii
C) i and ii
D) i, ii, and iii
E) i and iii

Question

Quizplus · Accepted Answer

Modern DSGE models often include nominal rigidities to better capture the dynamics of real-world economies, such as price and wage stickiness. Complete markets and homogeneity are not necessarily features of modern DSGE models, as these models often incorporate market imperfections and heterogeneity among agents to enhance their realism.

Which of the Following Features Is/are Frequently Included in Modern