When consumers' incomes decline during a recession, they increase their consumption of instant coffee and reduce their consumption of other beverages. Therefore, instant coffee:
A. has an income elasticity of demand greater than zero but less than one.
B. is normal.
C. has a negative income elasticity of demand.
D. is a necessity because consumers buy more during a recession.
Answer: C
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A) is always the more efficient estimator when compared to OLS. B) is the OLS estimator of the coefficients in a transformed model, where the errors of the transformed model satisfy the Gauss-Markov conditions. C) cannot handle binary variables, since some of the transformations require division by one of the regressors. D) produces identical estimates for the coefficients, but different standard errors.
How does investment as a share of GDP in countries with more economic freedom compare with economies that are less free? How does the productivity of investment in the freer economies compare with its productivity in the less free economies? How will this influence differences in growth rates and income levels? Explain
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A. collective action. B. reducing economic inequality. C. government intervention in the market. D. the actions of independent, self-interested buyers and sellers.
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A) a reduction in seignorage. B) an increase in seignorage. C) no change in seignorage. D) an ambiguous effect on seignorage.