In the case of exact identification
A) you can use the J-statistic in a test of overidentifying restrictions.
B) you cannot use TSLS for estimation purposes.
C) you must rely on your personal knowledge of the empirical problem at hand to assess whether the instruments are exogenous.
D) OLS and TSLS yield the same estimate.
Answer: C
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If Rhoda in Hungary buys candy from Matt in Maine for $20, and Matt buys foodin his favorite goulash restaurant in Hungary for $20, then the U.S. net exports:
A. and net capital outflow are both zero. B. and net capital outflow both equal $20. C. is zero and net capital outflow is $20. D. equals $20 and net capital outflow is zero.
Which of the scenarios best reflects the meaning of the term inflation targeting?
A) A local shopping mall offers an "inflation discount," which compensates for the recent increase in prices, in the hopes of targeting savvy consumers. B) Hoping to reduce inflation to improve public opinion, the Federal Reserve decides to lower interest rates. C) A central bank is expected to achieve a 3% annual inflation rate. D) In anticipation of the upcoming election, the chairman of the Federal Reserve lowers interest rates, hoping to win support for the incumbent president.
A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: ln M = 14.666 + .021 ln C ? 0.036 ln r, where M denotes real money balances, C is an index of consumer confidence, and r is the interest rate paid on bank deposits. Based on this study we know that the interest elasticity is:
A. very inelastic. B. unitary. C. zero. D. very elastic.
Which of the following are assumptions behind the Coase theorem?
A) low transactions costs B) low levels of pollution C) high levels of pollution D) the necessity of government intervention