Which of the following is true of the White test?
A. The White test is used to detect the presence of multicollinearity in a linear regression model.
B. The White test cannot detect forms of heteroskedasticity that invalidate the usual Ordinary Least Squares standard errors.
C. The White test can detect the presence of heteroskedasticty in a linear regression model even if the functional form is misspecified.
D. The White test assumes that the square of the error term in a regression model is uncorrelated with all the independent variables, their squares and cross products.
Answer: D
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a. is less than the marginal cost of reducing the additional pollution. b. equals the marginal cost of reducing the additional pollution. c. equals the average cost of reducing the additional pollution d. is greater than the marginal cost of reducing the additional pollution.
An inflationary gap will occur when
a. real GDP exceeds nominal GDP. b. nominal GDP exceeds real GDP. c. real GDP exceeds potential GDP. d. potential GDP exceeds real GDP
The unemployment caused by the time that it takes to match workers and jobs is called:
A. frictional unemployment. B. the discouraged-worker effect. C. structural unemployment. D. wage rigidity.
Assume individuals consider only the long run effects of changes in future macro variables when forming expectations of future output and future interest rates. Suppose individuals expect future government spending to decrease. Given this information, individuals will expect
A) a reduction in the expected future interest rate and no change in expected future output. B) a reduction in the expected future interest rate and an increase in expected future output. C) a reduction in the expected future interest rate and a reduction in expected future output. D) a reduction in the expected future interest rate and an ambiguous effect on expected future output.