Departures from stationarity
A) jeopardize forecasts and inference based on time series regression.
B) occur often in cross-sectional data.
C) can be made to have less severe consequences by using log-log specifications.
D) cannot be fixed.
Answer: A) jeopardize forecasts and inference based on time series regression.
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According to the aggregate expenditure model, when faced with unwanted inventory, firms
A) do nothing and wait for equilibrium to be restored. B) are forced to go out of business. C) immediately cut prices. D) decrease production. E) increase production.
Refer to Figure 2-12. One segment of the circular flow diagram in the Figure shows the flow of funds from market F to economic agents G. The funds represent spending on goods and services. What is market F and who are economic agents G?
A) F = product markets; G = firms B) F = factor markets; G = firms C) F = factor markets; G = households D) F = product markets; G = households