The linear probability model is
A) the application of the multiple regression model with a continuous left-hand side variable and a binary variable as at least one of the regressors.
B) an example of probit estimation.
C) another word for logit estimation.
D) the application of the linear multiple regression model to a binary dependent variable.
Answer: D) the application of the linear multiple regression model to a binary dependent variable.
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College students who increase their human capital by acquiring the skills required for certain occupations typically earn higher incomes than high school graduates. This is called:
A. the learning effect of a college education. B. the signaling effect of a college education. C. the discriminatory effect of a college education. D. None of these
Which of the following is NOT a reason for the government to regulate a nonmonopolistic industry?
A) to allow firms to achieve the profit maximizing output B) asymmetric information C) to protect consumer interests D) market failures
Total income in an economy is equal to
A) GDP minus net exports. B) income minus taxes. C) the sum of wages, interest, rent, and profit. D) firm revenues.
Suppose the money demand of individuals and firms depends on what they perceive to be the probabilities that the economy will expand or contract over the following six months. Suppose their money demand is given by the equation L = 0.5Y - 100i + 20z, where z is the probability that the economy is expanding six months in the future. If z = 1, the economy will certainly be in recovery, if z = 0, the economy will certainly be in recession, and for z between 0 and 1 there is some uncertainty about the future state of the economy. Use a classical (RBC) model of the economy. If the Fed moves the money supply to target the price level, how does the money supply relate to the expected future state of the economy? Is this an example of reverse causation?
What will be an ideal response?