Which of the following actions did Congress NOT take in the 1930s, in an effort to prevent future financial crises like the stock market crash of 1929?
A. Federal Reserve Act
B. Glass-Steagall Banking Act
C. Formation of the FDIC
D. Formation of the SEC
Answer: A
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The theory of purchasing power parity
A) extends the law of one price to a group of goods. B) assumes that most changes in nominal exchange rates are the result of changes in real exchange rates. C) assumes that inflation rates are roughly the same in most countries. D) was valid only under the gold standard.
An increase in the demand for a product will cause
a. both the demand for and prices of the resources used to produce the product to decline. b. both the demand for and prices of the resources used to produce the product to increase. c. the demand for the resources used to produce the product to increase and their prices to decline. d. the demand for the resources used to produce the product to decline and their prices to increase.
A spurious regression refers to a situation where:
A. the direction of the relationship between the dependent variable and the explanatory variables is uncertain. B. even though two variables are independent, the OLS regression of one variable on the other indicates a relationship between them. C. a few important and necessary explanatory variables are left out of a regression equation, thus leading to inefficient and inconsistent forecasts. D. at least one of the variables used in a regression equation does not have a unit root and the error terms are heteroskedastic.
An example of a positive statement is:
A) The rate of unemployment is 4 percent. B) A high rate of economic growth is good for the country. C) Everyone in the country needs to be covered by national health insurance. D) Baseball players should not be paid higher salaries than the president of the United States.