With regard to preventing entry, if identical firms act simultaneously,
A) they cannot credibly threaten each other.
B) they will all incur losses.
C) only one firm will enter the market.
D) none of them will enter the market.
A) they cannot credibly threaten each other.
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A quota will reduce consumer welfare when
A) the quota is less than the amount purchased without the quota. B) the quota is greater than the amount purchased without the quota. C) the quota is on a good with high income elasticity. D) Quotas always reduce consumer welfare.
There has been much talk recently about the convergence of inflation rates between many of the OECD economies
You want to see if there is evidence of this closer to home by checking whether or not Canada's inflation rate and the United States' inflation rate are cointegrated. (a) You begin your numerical analysis by testing for a stochastic trend in the variables, using an Augmented Dickey-Fuller test. The t-statistic for the coefficient of interest is as follows: Variable with lag of 1 InfCan ?InfCan InfUS ?InfUS t-statistic -1.93 -6.38 -2.37 -5.63 where InfCan is the Canadian inflation rate, and InfUS is the United States inflation rate. The estimated equation included an intercept. For each case make a decision about the stationarity of the variables based on the critical value of the Augmented Dickey-Fuller test statistic. (b) Your test for cointegration results in a EG–ADF statistic of (–7.34). Can you reject the null hypothesis of a unit root for the residuals from the cointegrating regression? (c) Using a working hypothesis that the two inflation rates are cointegrated, you want to test whether or not the slope coefficient equals one. To do so you estimate the cointegrating equation using the DOLS estimator with HAC standard errors. The coefficient on the U.S. inflation rate has a value of 0.45 with a standard error of 0.13. Can you reject the null hypothesis that the slope equals unity? (d) Even if you could not reject the null hypothesis of a unit slope, would that have been sufficient evidence to establish convergence? What will be an ideal response?
A decrease in the unemployment rate from 21 percent to 17 percent can be illustrated as: a. an inward shift of the production possibilities curve
b. an outward shift of the production possibilities curve. c. a movement down and to the right along the production possibilities curve. d. a movement from a point inside the production possibilities curve to a point closer to the production possibilities curve.
To promote rapid economic growth, the new growth theory would argue for increased scholarships in
A. women’s studies. B. deconstructionist literature. C. post-modern sociology. D. biology.