Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005 . However, the inflation rate was lower between 2004 and 2005 than it was between 2003 and 2004 . Which of the following scenarios is consistent with this assumption?
a. The CPI was 100 in 2003, 110 in 2004, and 105 in 2005.
b. The CPI was 100 in 2003, 120 in 2004, and 135 in 2005.
c. The CPI was 100 in 2003, 105 in 2004, and 130 in 2005.
d. The CPI was 100 in 2003, 90 in 2004, and 88 in 2005.
b
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The assumption that in the long run prices and wages are fully flexible implies that the long-run aggregate supply curve is determined by ________
A) capital and labor inputs B) technology C) the natural rate of unemployment D) all of the above E) none of the above
With heteroskedastic errors, the weighted least squares estimator is BLUE. You should use OLS with heteroskedasticity-robust standard errors because
A) this method is simpler. B) the exact form of the conditional variance is rarely known. C) the Gauss-Markov theorem holds. D) your spreadsheet program does not have a command for weighted least squares.
The basic difference between a tariff and quota is that:
a. a quota can be imposed both on imports and exports, whereas a tariff can be imposed only on imports. b. a quota yields revenue to the government, whereas a tariff does not yield any revenue. c. a tariff reduces the import of the goods with greater certainty than quota as the amount of import restricted by quota depends on the price elasticity of demand for importable. d. a tariff is a quantitative restriction on imports, whereas a quota is an import duty. e. a tariff raises the price of the product only in the domestic market, whereas with a quota, both domestic and foreign producers receive a higher price.
Bank reserves include:
a. High quality (i.e., AAA-rated) loans. b. Vault cash and deposits at the central bank. c. Tellers, who are trained and ready to work in case of a general bank strike. d. Government bonds, high-quality (e.g., AAA) corporate stocks, and cash in circulation. e. Checking deposits and borrowings from the central bank.