How did CDS' contribute to the financial crisis of 2007-2009?
What will be an ideal response?
In three important ways: (1) fostering uncertainty about who bears the credit risk on a given loan or security, (2) making the leading CDS sellers mutually vulnerable, and (3) making it easier for sellers of insurance to assume and conceal risk.
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To calculate the J-statistic you regress the
A) squared values of the TSLS residuals on all exogenous variables and the instruments. The statistic is then the number of observations times the regression R2. B) TSLS residuals on all exogenous variables and the instruments. You then multiply the homoskedasticity-only F-statistic from that regression by the number of instruments. C) OLS residuals from the reduced form on the instruments. The F-statistic from this regression is the J-statistic. D) TSLS residuals on all exogenous variables and the instruments. You then multiply the heteroskedasticity-robust F-statistic from that regression by the number of instruments.
If firms in a perfectly competitive market have dissimilar cost curves what will be the shape of the long-run supply curve?
Aggregate expenditure is the sum of
a. all types of spending by households and firms b. spending and savings by households c. spending by households and governments on final goods and services d. spending by households, government, firms, and foreigners on final goods and services e. all spending and saving by households, firms, and governments
Which of the following, all else fixed, will cause the real exchange rate to decrease?
A) a nominal appreciation B) an increase in the foreign price level C) an increase in the domestic price level D) all of the above E) none of the above