Consider the following simple regression model y = 
0 + 1x1 + u. The variable z is a poor instrument for x if _____.
A. there is a high correlation between z and x
B. there is a low correlation between z and x
C. there is a high correlation between z and u
D. there is a low correlation between z and u
Answer: B
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Maximum possible deposit expansion will occur when:
A) Excess reserves equal zero, and banks can make no further loans. B) All of the initial increase in reserves have been converted into excess reserves. C) The amount of deposit expansion can be supported by a level of required reserves equal to the initial increase in reserves a. C only B. B only C. A, B and C D. A and C E. A only
Marginal rate of substitution between X and Y is
a. total utility of X divided by total utility of Y. b. marginal utility of X divided by marginal utility of Y. c. total utility of X divided by marginal utility of Y. d. none of the above.