The U.S. government subsidizes the production of ethanol from corn and requires gasoline to contain a specific percentage of ethanol.What are the unintended consequences of this program?I. higher corn prices II. higher prices for cornbread and tortillas, products made from corn III. lower prices for gasoline because corn is a renewable resource
a. II only
b. I only
c. I and II
d. I, II, and III
c. I and II
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The curve labeled A in the above figure is
A) a short-run aggregate supply curve. B) an aggregate demand curve. C) a long-run aggregate supply curve. D) a production possibilities curve.
Forward contracts are often illiquid because
A) any capital gains on them are heavily taxed, making investors reluctant to sell them. B) government regulation has not provided for a secondary market in them. C) they generally contain terms specific to the particular buyer and seller. D) the brokerage fees involved in buying and selling them are very high.
List five major economic activities of government, and give an example of each
Consider the following simple regression model y = 
0 + 1x1 + u. Suppose z is an instrument for x. Which of the following conditions denotes instrument relevance?
A. Cov(z,u) > 0
B. Cov(z,u) < 0
C. Cov(z,x) 
0
D. Cov(z,x z) = 0