Which of the following is a reason for using the correlated random effects approach?
A. It provides unbiased and consistent estimators when the idiosyncratic errors are serially correlated.
B. It provides unbiased and consistent estimators when the idiosyncratic errors are heteroskedastic.
C. It provides a more efficient estimate than the fixed effects approach.
D. It provides a way to include time-constant explanatory variables in a fixed effects analysis.
Answer: D
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One example of a microeconomic question is, "Should unemployment benefits be increased?"
Indicate whether the statement is true or false
If the long-run market supply curve is perfectly elastic, a decrease in variable cost will:
a. shift the supply curve upward to a higher market-clearing price level. b. shift the supply curve downward to a lower market-clearing price level. c. shift the supply curve to the right to a higher market-clearing output. d. shift the supply curve to the left to a lower market-clearing output.