The distributed lag model assumptions include all of the following with the exception of:
A) There is no perfect multicollinearity.
B) Xt is strictly exogenous.
C) E(ut Xt, Xt-1, Xt-2) = 0
D) The random variables Xt and Yt have a stationary distribution.
Answer: B
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Other things being equal, when the Fed buys U.S. government securities
A) the quantity of paper currency and coins in circulation expands by more than the amount of the Fed's purchase. B) the Fed's total assets and total liabilities immediately expand by exactly the amount of the Fed's purchase. C) the U.S. Treasury must immediately issue new securities to replace the securities that the Fed has removed from the market. D) the quantity of deposits in the U.S. banking system expands by less than the amount of the Fed's purchase.
Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for tuna. Which panel best describes what happens in this market when there is a decrease in the productivity of commercial fishermen?
A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
If the government imposes a price ceiling below the market equilibrium price, which of the following will result?
A. There will be a surplus of the good. B. The quantity demanded will exceed the quantity supplied. C. The quantity supplied will exceed the quantity demanded. D. The demand curve will shift to the left.
Monopolistically competitive firms do not differentiate their products by:
A. changing the products' physical characteristics. B. selling products at different locations. C. offering different levels of service that come with a product. D. charging different prices to different groups of consumers.