Often trade will not occur because
a. transaction costs are too high
b. neither party has an opportunity cost
c. the benefits to one party just equal the losses to the other party
d. no one expects to gain from the trade
e. the profits of the firm are excessive
A
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(Requires Internet access for the test question) The following question requires you to download data from the internet and to load it into a statistical package such as STATA or EViews
a. Your textbook suggests using two test statistics to test for stationarity: DF and ADF. Test the null hypothesis that inflation has a stochastic trend against the alternative that it is stationary by performing the DF and ADF test for a unit autoregressive root. That is, use the equation (14.34) in your textbook with four lags and without a lag of the change in the inflation rate as a regressor for sample period 1962:I — 2004:IV. Go to the Stock and Watson companion website for the textbook and download the data "Macroeconomic Data Used in Chapters 14 and 16." Enter the data for consumer price index, calculate the inflation rate and the acceleration of the inflation rate, and replicate the result on page 526 of your textbook. Make sure not to use the heteroskedasticity-robust standard error option for the estimation. b. Next find a website with more recent data, such as the Federal Reserve Economic Data (FRED) site at the Federal Reserve Bank of St. Louis. Locate the data for the CPI, which will be monthly, and convert the data in quarterly averages. Then, using a sample from 1962:I — 2009:IV, re-estimate the above specification and comment on the changes that have occurred. c. For the new sample period, find the DF statistic. d. Finally, calculate the ADF statistic, allowing for the lag length of the inflation acceleration term to be determined by either the AIC or the BIC. What will be an ideal response?
A sudden rise in input prices which drives up the marginal cost of producing automobiles will shift the supply curve of automobiles upward
Indicate whether the statement is true or false
A school bus is an example of
a. a stationary source c. a nonpoint source b. a mobile source d. none of the above
Under a flexible-price monetary approach to the exchange rate
A) when the domestic money supply falls, the price level would eventually fall, increasing the interest rate. B) when the domestic money supply falls, the price level would fall right away, causing a reduction in the interest rate. C) when the domestic money supply falls, the price level would fall right away, causing an increase in the interest rate. D) when the domestic money supply falls, the price level would eventually fall, keeping the interest rate constant. E) when the domestic money supply falls, the price level would fall right away, keeping the interest rate constant.