Which of the following is a difference between least absolute deviations (LAD) and ordinary least squares (OLS) estimation?
A. OLS is more computationally intensive than LAD.
B. OLS is more sensitive to outlying observations than LAD.
C. OLS is justified for very large sample sizes while LAD is justified for smaller sample sizes.
D. OLS is designed to estimate the conditional median of the dependent variable while LAD is designed to estimate the conditional mean.
Answer: B
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The stock of wealth increases more rapidly the faster the flow of ________.
A. saving B. money C. income D. assets
Which of the following is not directly counted in GDP?
A) investment expenditures B) consumer goods C) government purchases D) intermediate goods
When a prisoners' dilemma game is repeated a finite number of times (T)
A) cooperation unravels during the first round of the game, resulting in the static game Nash equilibrium. B) cooperation continues until the T-2 round, where the players will switch to a non-cooperative Nash equilibrium. C) firms cooperate and achieve the collusive Nash equilibrium for all rounds. D) None of the above.
Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. What is the expected value of the payoff in the first game?
A. $5.75 B. $5.00 C. $4.75 D. $4.50