My macro class has been asking me what kind of exam they can expect

Try this question:

"Simon Grant and John Quiggin argue that taking the equity premium seriously–-the well-known fact that the average annual historical return of stocks is seven times that of government bonds and other debt-–has many implications, the most robust of which is that recessions are extremely costly even if they don’t lower average consumption and that macroeconomic stabilization policies are more important than has been thought."

True or false, and why?  Under what conditions is your answer wrong (always the proper query)?  Here is a relevant link, though registration is required.


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