The biggest conceptual difference between using VARs for forecasting and using them for structural modeling is that
A) you need to use the Granger causality test for structural modeling.
B) structural modeling requires very specific assumptions derived from economic theory and institutional knowledge of what is exogenous and what is not.
C) you can no longer use the information criteria to decide on the lag length.
D) structural modeling only allows a maximum of three equations in the VAR.
Answer: B
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The notion that, following a devaluation, the BOT falls for a while before increasing is called a ________ effect
A) relative price B) elasticity C) J-curve D) pass-through
An important element in estimating the present value of an investment is the calculation of the discount factor. The discount factor may be expressed as _______ where r is the discount rate and n is the number of years the investment is held
a. (1 + r)n b. (1 + n)r c. 1/(1 + r)n d. 1/(1 + n)r
The fundamental cause of monopoly is
a. incompetent management in competitive firms. b. the zero-profit feature of long-run equilibrium in competitive markets. c. advertising. d. barriers to entry.
Briefly explain the effect of pursuing expansionary policy during a time of full employment.
What will be an ideal response?