If you included both time and entity fixed effects in the regression model which includes a constant, then
A) one of the explanatory variables needs to be excluded to avoid perfect multicollinearity.
B) you can use the "before and after" specification even for T > 2.
C) you must exclude one of the entity binary variables and one of the time binary variables for the OLS estimator to exist.
D) the OLS estimator no longer exists.
Answer: C
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For a 3-year simple loan of $10,000 at 10 percent, the amount to be repaid is
A) $10,030. B) $10,300. C) $13,000. D) $13,310.
For monetarists, the sole source of fluctuations in aggregate demand is ________
A) government spending and tax rates B) the velocity of money C) the supply of money D) international trade variables, i.e. exports and imports
Keynesian economics predicts that if government policy makers deem current equilibrium real Gross Domestic Product (GDP) to be "too low," then an appropriate policy action would be to
A) do nothing, because the economy is self-adjusting. B) raise government spending, thereby increasing aggregate demand and pushing up real Gross Domestic Product (GDP) with little or no inflationary consequences. C) increase taxes, thereby causing aggregate demand to increase and inducing a rise in real Gross Domestic Product (GDP) with little or no inflationary consequences. D) reduce the money stock, thereby causing aggregate demand to decrease and inducing a rise in fall in the price level that generates an increase in total planned expenditures.
On the graph above, what area represents consumer surplus when the price is $10?
A. A B. B C. C D. A and B E. B and C