One advantage of forecasts based on a VAR rather than separately forecasting the variables involved is
A) that VAR forecasts are easier to calculate.
B) you typically have knowledge of future values of at least one of the variables involved.
C) it can help to make the forecasts mutually consistent.
D) that VAR involves panel data.
Answer: C
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a. are major contributors to the formation of photochemical smog b. release only small amounts of NOX and VOCs c. play a minor role in the smog problem of Los Angeles d. have not been linked scientifically to smog formation
Automatic stabilizers are so-named because
A) they are automatically undertaken by the Federal Reserve Bank to reduce budget deficits. B) they occur automatically when real GDP changes. C) the policy suggestions of the Council of Economic Advisors are automatically followed. D) the policy suggestions of the Office of Management and Budget are automatically followed.
For a given firm, whenever the ratio of marginal product to input price differs across inputs,
A. it will always be possible to make a cost-saving substitution in favor of the input with the higher MP/P ratio. B. the market will adjust the price of the higher priced input. C. the market will adjust the price of the lower priced input. D. it will always be possible to make a cost-saving substitution in favor of the input with the lower MP/P ratio (except in the case of corner solutions).
In the third quarter of 2008, investment in the US totaled $1.4 trillion and in 2007, investment was $1.3 trillion. In addition, third quarter real GDP was $11 trillion. Suppose the MPC in the US is 0.8. ignoring the effects of imports and taxes, the multiplier is __________ and the change in investment will decrease equilibrium expenditure by __________.
a) 2; $1 trillion b) 5; $1 trillion c) 2; $200 million d) 5; $500 million