Which of the following statements is true?
A. To carry out OLS estimation, it is necessary that the error terms should be correlated with the explanatory variables.
B. Measurement error and simultaneity are potential sources of endogeneity.
C. While entering data for a regression analysis, qualitative explanatory variables should be assigned numerical values.
D. AR models are best suited for ordered responses.
Answer: B
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The FOMC is concerned about inflation and has ________ the federal funds rate. Due to substitution effects, other ________ interest rates will ________ almost immediately
A) increased; short-term; increase B) decreased; short-term; decrease C) increased; long-term; increase D) decreased; long-term; decrease E) increased; short-term; decrease
If you lend a dollar for a year and at the end of the year the price level has risen by 10 percent
A) the purchasing power of your loan has risen over the year regardless of the interest rate at which you lent it. B) the purchasing power of your loan has remained constant over the year regardless of the interest rate at which you lent it. C) you must have earned a nominal interest rate of 10 percent to maintain the purchasing power of your loan. D) you must have earned a nominal interest rate of 5 percent to maintain the purchasing power of your loan.
Haiti was once a heavily forested country. Today, 80 percent of Haiti's forests have been cut down, primarily to be burned to create charcoal. The reduction in the number of trees has lead to devastating floods when it rains heavily
This is an example of A) human greed. B) the consequences of not having a market economic system. C) the tragedy of the commons. D) tragic externalities.
Private entrepreneurs are likely to make better investment decisions than central planners because
What will be an ideal response?