The Gauss-Markov Theorem proves that
A) the OLS estimator is t distributed.
B) the OLS estimator has the smallest mean square error.
C) the OLS estimator is unbiased.
D) with homoskedastic errors, the OLS estimator has the smallest variance in the class of linear and unbiased estimators, conditional on X1,…, Xn.
Answer: D
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An alternative to maintaining an overvalued currency is to ________ the fundamental value of the exchange rate by ________ monetary policy.
A. increase; easing B. decrease; tightening C. increase; tightening D. decrease; easing
The present value of an expected future payment ________ as the interest rate increases
A) falls B) rises C) is constant D) is unaffected
What unusual measures did the Fed take in trying to reduce long-term interest rates during the Financial Crisis of 2007-2009?
A) buying mortgage-backed securities issued by Fannie Mae and Freddie Mac B) reducing the federal funds rate multiple times C) issuing its own securities D) eliminating the discount rate on loans to member banks
Good A has a price elasticity of demand of .27, while good B has a price elasticity of demand of 2.9 . To raise the most tax revenue, the government should:
a. place a unit tax on good A. b. place a unit tax on good B. c. raise the price elasticity of demand for good A. d. subsidize the production of good B. e. cut its spending for various social programs.