Business cycles will occur if either of the two theories below characterizes the behavior of the economy:
A) the classical or the Keynesian theories of aggregate demand.
B) the classical or the real balance theory.
C) deflation impotence or rigid nominal wages.
D) A and C.
C
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Which of the following assumptions is needed for the plug-in solution to the omitted variables problem to provide consistent estimators?
A. The error term in the regression model exhibits heteroskedasticity. B. The error term in the regression model is uncorrelated with all the independent variables. C. The proxy variable is uncorrelated with the dependent variable. D. The proxy variable has zero conditional mean.
If the elasticity of demand for labor in the United States is unitary, immigration into the United States can be expected to:
A. increase the average U.S. wage rate. B. decrease the total amount of wage earnings that U.S. workers receive. C. increase the total amount of wage earnings that U.S. workers receive. D. leave the total amount of wage earnings that U.S. workers receive unchanged.
The exchange rate is the price of one currency in terms of another
a. True b. False Indicate whether the statement is true or false
An economic model is useful only if it:
A. contains no positive statements. B. captures all the complexities of reality. C. yields accurate predictions. D. has both macro- and microeconomic applications.