Heterogeneous population
A) implies that heteroskedasticity-robust standard errors must be used.
B) suggest that multiple characteristics must be used to describe the population.
C) effects can be captured through interaction terms.
D) refers to circumstances in which there is unobserved variation in the causal effect with the population.
Answer: D) refers to circumstances in which there is unobserved variation in the causal effect with the population.
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The classical economists assumed that
A) wages and prices were inflexible, especially downward. B) government intervention in the economic system was necessary and helpful. C) monopoly was widespread in the economy. D) wages and prices were flexible.
Suppose real GDP is $13 trillion, potential real GDP is $13.5 trillion, and Congress and the president plan to use fiscal policy to restore the economy to potential real GDP
Assuming a constant price level, Congress and the president would need to increase government purchases by A) less than $500 billion. B) $500 billion. C) more than $500 billion. D) None of the above are correct. Congress must act to decrease government purchases in this case.