A _____ variable is used to incorporate qualitative information in a regression model.
A. dependent
B. continuous
C. binomial
D. dummy
Answer: D
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When set correctly, a Pigouvian tax is efficient because it is equivalent to a lump sum tax.
Answer the following statement true (T) or false (F)
The aggregate demand–aggregate supply model shows that closing an expansionary gap involves deflation and closing a recessionary gap involves inflation
a. True b. False Indicate whether the statement is true or false
Which of the following is correct? When actual leakages exceed actual injections, then:
a. Inventories rise, unemployment tends to rise, and prices tend to fall. b. Inventories rise, unemployment tends to fall, and prices tend to rise. c. Inventories fall, unemployment tends to rise, and prices tend to rise. d. It is impossible for these two to be unequal. e. The nation falls into an economic recession.
In a certain economy, when income is $400, consumer spending is $325 . The value of the multiplier for this economy is 3.33 . It follows that, when income is $450, consumer spending is
a. $360 . For this economy, an initial increase of $50 in consumer spending translates into a $266.67 increase in aggregate demand. b. $360 . For this economy, an initial increase of $50 in consumer spending translates into a $166.50 increase in aggregate demand. c. $341.67 . For this economy, an initial increase of $50 in consumer spending translates into a $266.67 increase in aggregate demand. d. $341.67 . For this economy, an initial increase of $50 in consumer spending translates into a $166.25 increase in aggregate demand.