The government requires the steel industry to adopt new eco-friendly machines, which cannot be used in other industries. If the machines are very expensive and the capital market does not work efficiently, then
A) entrants are encouraged to enter the market and adopt the new machines.
B) firms can easily leave the steel industry without loss.
C) entrants are discouraged by the new requirements.
D) None of the above.
C
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If the value of bank's loans declines, what is the corresponding reduction in a liability entry that the bank makes?
A) Deposits are reduced by the amount of the decline in the value of the loan. B) Borrowings are reduced by the amount of the decline in the value of the loan. C) Net worth is reduced by the amount of the decline in the value of the loan. D) Cash items in the process of collection are reduced by the amount of the decline in the value of the loan.
When the borrowing constraint is binding, ________
A) wealth is zero B) current consumption is lower than future consumption C) future consumption is lower than current consumption D) consumption smoothing is not possible
Using the textbook example of 420 California school districts and the regression of testscores on the student-teacher ratio, you find that the standard error on the slope coefficient is 0.51 when using the heteroskedasticity robust formula, while it is 0.48 when employing the homoskedasticity only formula. When calculating the t-statstic, the recommended procedure is to
A) use the homoskedasticity only formula because the t-statistic becomes larger B) first test for homoskedasticity of the errors and then make a decision C) use the heteroskedasticity robust formula D) make a decision depending on how much different the estimate of the slope is under the two procedures
Short-run economic growth comes from:
A. Expanding the production possibilities curve. B. A rightward shift of aggregate supply. C. Increased or more efficient use of existing resources. D. A population decrease which increases output per person.