Exclusion restrictions are said to be imposed in a two-equation simultaneous equations model if it is assumed that:
A. certain exogenous variables do not appear in the first equation and others are absent from the second equation.
B. certain endogenous variables do not appear in the first equation and others are absent from the second equation.
C. the error terms in each equation is correlated with the exogenous variables.
D. the error terms in each equation is uncorrelated with the exogenous variables.
Answer: A
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The GDP price index
A) can be interpreted as 100 multiplied by real GDP divided by nominal GDP. B) is the difference between nominal GDP and real GDP. C) measures the average price level. D) can be interpreted as real GDP minus nominal GDP and the resulting difference then multiplied by 100. E) is equal to between real GDP minus nominal GDP.
Which of the following is true of the price elasticity of demand of a product?
a. It measures the responsiveness of quantity demanded or quantity supplied to a change in one of the determinants of demand and/or supply. b. It is calculated as the percentage change in the quantity demanded of the product divided by the percentage change in the price of the product. c. It is calculated as the percentage change in the demand for the product divided by the percentage change in income of a consumer, everything else held constant. d. It measures the responsiveness of demand to a change in the quantity supplied. e. It is calculated as the percentage change in the quantity demanded of the product divided by the percentage change in the price of a related product, everything else held constant.
Fixed costs can be defined as costs that
a. vary inversely with production. b. vary in proportion with production. c. are incurred only when production is large enough. d. are incurred even if nothing is produced.
Assume you pay a premium of $0.50/bu for a soybean call option with a strike price of $9.20/bu and that the current futures price is $8.90/bu. What is the option's current intrinsic value?
A. $0.50/bu B. $0.30/bu C. $0/bu D. $-0.50/bu