If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?
A. Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation.
B. It is not possible for an economist to determine causation between variables.
C. The reoccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades.
D. The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom.
Answer: A
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Liquidity refers to how:
A. easy an asset is to convert immediately to cash without losing value. B. quickly the same dollar changes hands in the economy. C. easy money converts to assets in an economy. D. quickly the average household spends its disposable income.
In order to benefit from diversification, the returns on assets in a portfolio must:
A. be perfectly negatively correlated. B. have the same idiosyncratic risks. C. be perfectly positively correlated. D. positively correlated but not perfectly.
Refer to the figure below. If box A represents households, B the product market, and C businesses, and if flow (3) represents revenues, then flow (1) would represent:
A. Costs
B. Money income
C. Consumption expenditures
D. Resources
If the net present value is positive, the present value of the investment's stream of future operating profits is ________ than the present value of its cost and profit-maximizing managers ________ make the investment.
A) less; should not B) less; should C) greater; should D) greater; should not