Which of the following assumptions is known as exclusion restrictions?
A. The assumption that an instrumental variable is excluded from a regression model and is correlated with the error term.
B. The assumption that an instrumental variable is excluded from a regression model and is correlated with an exogenous explanatory variable.
C. The assumption that an exogenous explanatory variable is excluded from a regression model and is uncorrelated with the error term.
D. The assumption that an endogenous explanatory variable excluded from a regression model and is uncorrelated with the error term.
Answer: C
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Suppose the Federal Reserve buys bonds from the banking system, the money supply curve ________.
A. will become flatter B. will become steeper C. shift to the left D. shift to the right
The marginal social cost is
A) equal to the marginal private cost plus the marginal external cost. B) equal to the marginal private cost minus the marginal external cost. C) the same as the marginal private cost. D) the same as the marginal external cost.
If Coke and Pepsi are close substitutes, then if:
a. Coke raises its price, so will Pepsi. b. Coke raises its price, it will not lose customers to Pepsi. c. Pepsi lowers its price, it will not hurt Coke. d. Pepsi lowers its price, so will Coke. e. Coke raises its price, some customers will switch to Pepsi.
When the nation of Roma allows trade and as a result becomes an importer of scooters,
a. residents who produce scooters become worse off; residents who buy scooters become better off; and the economic well-being of Roma rises. b. residents who produce scooters become worse off; residents who buy scooters become better off; and the economic well-being of Roma falls. c. residents who produce scooters become better off; residents who buy scooters become worse off; and the economic well-being of Roma rises. d. residents who produce scooters become better off; residents who buy scooters become worse off; and the economic well-being of Roma falls.