Using the fact that the standardized variable Z is a linear transformation of the normally distributed random variable Y, derive the expected value and variance of Z
What will be an ideal response?
Answer: Z = Y = a + bY, with a = - and b = . Given (2.29) and (2.30) in the text, E(Z) = - + = 0, and .
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When (if at all) can the crowding-out effect be prevented?
A) when the Fed decreases the money supply to accommodate the expansionary fiscal policy B) when the real money supply is held constant C) when the real balance effect is working D) when the Fed allows the real money supply to increase sufficiently to keep the interest rate from rising
Another name for a shortage is
A) excess quantity supplied. B) excess quantity demanded. C) equilibrium. D) market clearing.
Which of the following does not constitute an act of "investment" as economists use the term?
A. An accountant attends a seminar on changes in the federal tax code. B. The city council authorizes the construction of a new fire station. C. A department store increases its inventory of football jerseys before the Super Bowl. D. A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 a share.
The long-run Phillips curve is
A. upward sloping. B. horizontal. C. downward sloping. D. vertical.