Randomization based on covariates is
A) not of practical importance since individuals are hardly ever assigned in this fashion.
B) dependent on the covariances of the error term (serial correlation).
C) a randomization in which the probability of assignment to the treatment group depends on one of more observable variables W.
D) eliminates the omitted variable bias when using the difference estimator based on Yi = ?0 + ?1Xi + ui, where Y is the outcome variable and X is the treatment indicator.
Ans: C) a randomization in which the probability of assignment to the treatment group depends on one of more observable variables W.
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Suppose a bank has $100,000 in checking account deposits with no excess reserves and the required reserve ratio is 5 percent. If the Federal Reserve lowers the required reserve ratio to 3 percent, then the bank will now have excess reserves of
A) $0. B) $2,000. C) $3,000. D) $5,000.
In the regression model Yi = β0 + β1Xi + β2Di + β3(Xi × Di) + ui, where X is a continuous variable and D is a binary variable, β3
A) indicates the slope of the regression when D=1. B) has a standard error that is not normally distributed even in large samples since D is not a normally distributed variable. C) indicates the difference in the slopes of the two regressions. D) has no meaning since (Xi × Di) = 0 when Di = 0.
The natural rate of unemployment
A. exists only during periods of recession or depression in the economy. B. prevails in long-run macroeconomic equilibrium, when all workers and employers have fully adjusted to any changes in the economy. C. prevails in the short-run macroeconomic equilibrium, before workers and employers have had a chance to adjust to an economic shock. D. exists due to welfare and unemployment benefits that reduce potential workers' incentives to find work.
Federal food distribution programs such as the food stamp program represent efforts to:
A. Increase supplies of agricultural commodities B. Increase demand for agricultural commodities C. Decrease the value of farming to the nation D. Facilitate the movement of people from farms to cities