The following are all least squares assumptions with the exception of:
A) The conditional distribution of ui given Xi has a mean of zero.
B) The explanatory variable in regression model is normally distributed.
C) (Xi, Yi), i = 1,..., n are independently and identically distributed.
D) Large outliers are unlikely.
Ans: B) The explanatory variable in regression model is normally distributed.
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When the quantity of money demanded is greater than the quantity of money supplied, people ________ bonds and the interest rate ________
A) sell; rises B) sell; falls C) buy; rises D) buy; falls
If people in the United States buy more of a foreign good when its price falls, then
A) the demand curve for U.S. dollars will slope up. B) the supply curve for U.S. dollars will slope up. C) the exchange rate will increase when there is inflation. D) fixed exchange rates will make foreign exchange markets more efficient.