In competitive markets, a surplus or shortage will:
A. Never exist because the markets are always at equilibrium
B. Cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage
C. Cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage
D. Cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage
Answer: B
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Why do environmentalists worry about faster economic growth? Economists concede that faster growth is not always better. Why?
International trade tends to lower the value of the multiplier because
a. imports fall as GDP increases. b. net exports fall as GDP increases. c. net exports tend to rise as GDP increases. d. exports fall as GDP increases.
A rightward shift in the demand curve for tennis balls could be caused by
A) a fall in the price of tennis balls. B) a fall in the price of tennis rackets. C) a rise in the price of tennis lessons. D) a fall in income, assuming tennis balls are a normal good.
Consider the following simple regression model y = 
0 + 1x1 + u. Suppose z is an instrument for x.
Which of the following statements is true?
A. The condition Cov(z,u) = 0 can be tested statistically.
B. The condition Cov(z,x) 
0 cannot be tested statistically.
C. The instrumental variables estimator is always biased if Cov(x,u) 
0.
D. The ordinary least squares estimator is unbiased if Cov(x,u) 
0 .