Simultaneous causality
A) means you must run a second regression of X on Y.
B) leads to correlation between the regressor and the error term.
C) means that a third variable affects both Y and X.
D) cannot be established since regression analysis only detects correlation between variables.
Answer: B) leads to correlation between the regressor and the error term.
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If the absolute value of the price elasticity of demand for DVD movies is 0.8 then the elasticity of demand of the DVD for the movie The Hangover should be
A) less then 0.8 in absolute value. B) equal to zero because the DVD of this movie has been out for several years. C) equal to 1 in absolute value. D) greater than 0.8 in absolute value.
The velocity of money ________
A) represents the average number of times a dollar turns over through the year B) provides the link between the money supply and nominal income C) times the money supply should equal total income, according to the equation of exchange D) all of the above E) none of the above
Which of the following non-OPEC nations have raised and lowered production in step with the OPEC nations, thus making the cartel more effective?
A. Venezuela and Nigeria B. Iran and Iraq C. Mexico and Norway D. Mexico and the United States
Assume that a firm's interest-rate cost-of-funds curve for R&D is perfectly elastic. Which of the following would decrease a firm's optimal R&D expenditures and, in equilibrium, increase the expected rate of return on the last dollar of R&D?
A. A rightward shift of the expected-rate-of-return curve. B. An upward shift of the interest-rate cost-of-funds curve. C. A leftward shift of the expected-rate-of-return curve. D. A downward shift of the interest-rate cost-of-funds curve.