If an explanatory variable is strictly exogenous it implies that:
A. changes in the lag of the variable does not affect future values of the dependent variable.
B. the variable is correlated with the error term in all future time periods.
C. the variable cannot react to what has happened to the dependent variable in the past.
D. the conditional mean of the error term given the variable is zero.
Answer: C
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One of the most effective international cartels ever formed was in
a. steel b. iron c. wheat d. rubber e. oil
The advantage of a system of fixed exchange rates over one where exchange rates are flexible is that
a. the government gains more control over the economy. b. floating exchange rates impose risks on importers and exporters from unpredictable exchange rates. c. exchange controls become unnecessary. d. fiscal and monetary policy can focus more on domestic conditions.
People who buy stock in a corporation such as General Electric become
a. creditors of General Electric, so the benefits of holding the stock depend on General Electric's profits. b. creditors of General Electric, but the benefits of holding the stock do not depend on General Electric's profits. c. part owners of General Electric, so the benefits of holding the stock depend on General Electric's profits. d. part owners of General Electric, but the benefits of holding the stock do not depend on General Electric's profits.
Some economists believe that:
A. giving benefits to the rich will expand aggregate output and thus help the poor. B. taxing the rich will cause them to increase their work efforts. C. taxing the poor will cause them to increase their work efforts. D. giving benefits to the poor will reduce aggregate demand, improving business so that wealthy stockholders are better off.