The random error term ________ the effects of ________ influences on the dependent variable that are not included as explanatory variables
A) captures; observed
B) ignores; unobserved
C) ignores; observed
D) captures; unobserved
D
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In the long-run, a firm in monopolistic competition produces at an output level where
A) P > ATC and MR = MC. B) P > ATC and MR > MC. C) P = ATC and MR = MC. D) P = ATC and MR > MC. E) P = ATC and MC = ATC.
Stephanie listens to punk rock because her friends do. This is
A) a positive sum game. B) collusion. C) positive market feedback. D) negative market feedback.
Betty is out on a first date with Barney. She decides to order the garden salad with dressing on the side in an effort to make a good first impression, even though she prefers leg of lamb. Economic theory:
A. cannot explain why someone would choose a meal that brings her less utility than another. B. would suggest that making a good impression with her choice will bring her more utility than ordering lamb and making a bad impression. C. would suggest that she values what Barney thinks of her and will derive negative utility if she does not impress him. D. cannot be used to explain matters of the heart.
Which one of the following accurately states the view of activists who favor discretionary stabilization policy?
a. Neither monetary nor fiscal policy will exert an impact on the real level of economic activity. b. Since we have only limited ability to forecast the future direction of the economy, the best policy is to do nothing. c. Our ability to forecast the future direction of economic activity is quite good, and therefore, discretionary macroeconomic policy is now capable of eliminating fluctuations in the business cycle if policy makers would follow the advice of leading economists. d. The index of leading indicators and other forecasting tools provide policy makers with valuable information that permits them to institute stabilizing changes in macroeconomic policy.