The presence of correlated error terms creates problems for inference based on OLS. These can be overcome by
A) using HAC standard errors.
B) using heteroskedasticity-robust standard errors.
C) reordering the observations until the correlation disappears.
D) using homoskedasticity-only standard errors.
Answer: A
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If the Fed allows the federal funds rate to fall well below the rediscount rate it is likely that the Fed will
A) lower the rediscount rate and increase c, the proportion of demand deposits held as cash. B) raise the rediscount rate. C) increase loans to banks. D) decrease loans to banks.
Which of the following purchases would be counted as a final good in the GDP calculation?
a. A family's purchase of a used car. b. A speculator's purchase of 100 shares of Apple Computer stock. c. A deli's purchase of bread for making its sandwiches. d. A business's purchase of new office equipment.