The two conditions for a valid instrument are
A) corr(Zi, Xi) = 0 and corr(Zi, ui) ≠ 0.
B) corr(Zi, Xi) = 0 and corr(Zi, ui) = 0.
C) corr(Zi, Xi) ≠ 0 and corr(Zi, ui) = 0.
D) corr(Zi, Xi) ≠ 0 and corr(Zi, ui) ≠ 0.
Ans: C) corr(Zi, Xi) ≠ 0 and corr(Zi, ui) = 0.
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Three methods the government can use to cope with the external cost from pollution are
A) pollution taxes, subsidies, and outright bans. B) pollution taxes, regulations, and subsidies. C) marketable permits, pollution subsidies, and pollution taxes. D) pollution charges, marketable permits, and pollution limits. E) vouchers, pollution subsidies, and pollution taxes.
The most likely group of the following that would be eligible for unemployment insurance benefits is
a. new college graduates looking for their first job. b. mothers returning to the labor force after caring for young children. c. workers who quit their jobs. d. experienced workers recently laid off.
The law of one price is based on the purchasing power parity theory.
Answer the following statement true (T) or false (F)
If the required reserve ratio is 5 percent, then the simple deposit multiplier is
A) 2. B) 5. C) 10. D) 20.