An omitted variable is a variable that:
A) is purposely left out as it does not aid an economic analysis.
B) does not cause other variables in a study to change when it changes.
C) is removed from a study as it can lead to the problem of reverse causality.
D) has been left out, and if included, would explain why the variables considered in a study are correlated.
D
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The table above gives data for the nation of Pearl, a small island in the South Pacific. If aggregate demand increases so that the quantity of real GDP demanded is $6 billion more at each price level, the new equilibrium real GDP is ________, and the nation is now experiencing a(n) ________.
A) $22 billion; inflationary gap B) $22 billion; recessionary gap C) $28 billion; inflationary gap D) $28 billion; recessionary gap E) $25 billion; equilibrium
When Scuba, Inc, lowered the price of a tank of compressed air by 20 percent, it sold 10 percent more tankfuls. The price elasticity for compressed air is
a. 2. b. 1/2. c. 1. d. 20.
Consumption responds mostly directly to changes in the:
A. nominal price of a good. B. real price of a good C. perfect price of a good. D. the absolute dollar price of a good.
Which of the following is not counted in the GNP of the United States?
A. The value of services that are produced by state and local governments in the United States. B. The profit earned by a restaurant located in the United States but owned by a Mexican company. C. The interest earned by a U.S. bank on loans to a business firm located in Brazil. D. The wage of a U.S. citizen who works in a foreign country for a foreign firm.