Which of the following statements is true?
A. White test can be used to efficiently determine the presence of serial correlation in panel data.
B. The t statistic is not an efficient test to determine serial correlation in panel data.
C. Instrumental variables for both endogenous and exogenous variables are required for estimating simultaneous equation models concerned with panel data.
D. 2SLS should be applied to simultaneous equation models with panel data only after removing the unobserved effects from the equations of interest.
Answer: D
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The high-school dropout rate typically declines during a recession because
A) more money flows into the public sector as the flow declines in the private sector. B) teachers become more readily available during a recession. C) the opportunity cost of continuing in school falls in a recession. D) the demand for education rises in a recession. E) the legal school-leaving age is a function of the unemployment rate.
The saving-investment analysis for large open economies is somewhat more complicated than the analysis for small open economies mainly because ________
A) there is more information to keep track of for larger economies B) there are more unknowns in larger economies C) a larger economy may actually affect the world economy D) all of the above E) none of the above