Which of the following statements is true of spurious regressions?
A. The OLS estimates of the population parameters are efficient and unbiased and the t statistic is valid.
B. Even if the explanatory variables and the dependent variable are independent times series processes, the R2 can be large.
C. Spurious regressions are limited to I(0) processes, and are not possible in case of I(1) processes.
D. Spurious regressions are limited to I(1) processes, and are not possible in case of I(0) processes.
Answer: B
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The sum of the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) is
A) equal to one. B) greater than one. C) negative. D) less than one.
Answer the following statements true (T) or false (F)
1. The ability to produce a good or service at a lower opportunity cost than other producers face is known as comparative advantage. 2. The ability of a nation to gain from specialization and exchange is affected by factors such as shipping costs and exchange rates. 3. One cause for the uneven standard of living throughout the world is the uneven distribution of resources. 4. The application of the principle of comparative advantage requires each of two trading partners to have an absolute advantage over the other in the production of some particular commodity.
Institutions that borrow money from savers to lend to borrowers are known as
A) financial markets. B) bond brokers. C) financial intermediaries. D) asset exchanges.
The market for loanable funds is a market in which:
A. borrowers supply funds to savers, who want loans for their investment spending needs. B. borrowers buy and sell loans. C. savers interact to set the interest rate for loans. D. savers supply funds to those who want to borrow for their investment spending needs.