Econometrics Multiple Choice

1. A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: log M = 14.666 + .021 log C - .036 log r, where M denotes real money balance. C is an index of consumer confidence, and r is the interest rate paid on bank deposits. Based on this study, a 5% increase in interest rates will cause the demand for money to: A. Drop by 1.8% B. Increase by 1.8% C. Drop by .18% D. Increase by .18% 2. The demand for good X is estimated to be Qxd = 10,000 - 4Px+ 5Py+ 2M + Ax, where Px is the price of X, Py is the price of good Y, M is income, and Ax is the amount of advertising on X. Suppose the present price of good X is $50, Py is... click for more

Econometrics

a. Which demand function among the ones given here would you choose, and why? b. How would you interpret the coefficients of ln X2t and ln X3t in these models? c. What is the difference between specifications (2) and (4)? d. What problems do you foresee if you adopt specification (4)? (Hint: prices of both pork and beef are included along with the price of chicken) e. Since specification (5) includes the composite price of beef and pork, would you prefer the demand function (5) to the function (4)? Why? f. Are pork and/or beef competing or substitute products to chicken? How do you know? g. Assume function (5) is the “correct” demand function. Estimate the parameters of this model, ob... click for more

Economics Problems - Multiple Choice

33. In the rate process, the determination of the __________________ has historically been somewhat neglected in relation to the other steps in the process. a. Rate structure. b. Rate level. c. Allowable operating costs. d. Rate base. e. Allowable rate of return. 43. An illustration of a non-credible commitment is the promise: a. To not increase capacity in a declining industry. b. To match a new entrant’s discount price. c. To enter a profitable industry. d. To restrain output to the quota assigned by a cartel. e. To exit in the face of projected losses. 46. The problems of asymmetric information exchange arise ultimately because: a. One party to the exchange possesse... click for more

Probability

I'm having trouble with this problem: A student is taking two courses, history and math. The probability the student will pass the history course is .60 and the math is .70. The probability of passing both is .50. What is the probability of passing at least one?

Probability - A telemarketer makes six phone calls per hour

I'm not sure how to work this problem out - A telemarketer makes six phone calls per hour and is able to make a sale on 30 percent of these contacts. During the next two hours, find: a. The probability of making exactly four sales. b. The probability of making no sales. c. The probability of making exactly two sales. d. The mean number of sales in the two-hour period.