When the Fed ________ interest rates, bond prices ________
A) raises; do not change B) raises; rise
C) lowers; rise D) lowers; do not change
C
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A few years ago the news magazine The Economist listed some of the stranger explanations used in the past to predict presidential election outcomes
These included whether or not the hemlines of women's skirts went up or down, stock market performances, baseball World Series wins by an American League team, etc. Thinking about this problem more seriously, you decide to analyze whether or not the presidential candidate for a certain party did better if his party controlled the house. Accordingly you collect data for the last 34 presidential elections. You think of this data as comprising a population which you want to describe, rather than a sample from which you want to infer behavior of a larger population. You generate the accompanying table: Joint Distribution of Presidential Party Affiliation and Party Control of House of Representatives, 1860-1996 Democratic Control of House (Y = 0) Republican Control of House (Y = 1) Total Democratic President (X = 0) 0.412 0.030 0.441 Republican President (X = 1) 0.176 0.382 0.559 Total 0.588 0.412 1.00 (a) Interpret one of the joint probabilities and one of the marginal probabilities. (b) Compute E(X). How does this differ from E(X = 0)? Explain. (c) If you picked one of the Republican presidents at random, what is the probability that during his term the Democrats had control of the House? (d) What would the joint distribution look like under independence? Check your results by calculating the two conditional distributions and compare these to the marginal distribution. What will be an ideal response?
The principal-agent problem:
A. is when the principal has more information than the agent. B. is when the agent is tempted to put in more effort than the principal would like. C. is commonly seen in the employer-employee relationship. D. is when the principal and agent have the same objectives.
During the 1990s, the price of VCRs fell by about 30 percent, and quantity sold decreased by the same amount. The demand for VCRs must
A. be inelastic B. be elastic C. be unit elastic D. have shifted to right E. have shifted to the left
Suppose the money multiplier in the United States is 4. If the Fed wants to expand the money supply by 600 it should:
A. buy government securities worth 150. B. sell government securities worth 150. C. sell government securities worth 600. D. buy government securities worth 600.