The following is not an appropriate way to tell whether two variables are cointegrated:
A) see if the two variables are integrated of the same order.
B) graph the series and see whether they appear to have a common stochastic trend.
C) perform statistical tests for cointegration.
D) use expert knowledge and economic theory.
Answer: A
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Suppose your payroll check is directly deposited to your checking account. Everything else held constant, total reserves in the banking system ________ and the monetary base ________
A) remain unchanged; remains unchanged B) remain unchanged; increases C) decrease; increases D) decrease; decreases
Suppose that Venezuela experiences significant capital outflows after a recent election. If the nation had flexible exchange rates, these flows would have had the following effect on the financial account and monetary base
a. Financial account would rise and reserves account would fall. b. Financial account would not change and reserves account would fall. c. Financial account would not change and reserves account would not change. d. Financial account would fall and monetary base would not change. e. Financial account would fall and reserves account would rise.