Consider the following regression equation: y= 
0+ 1x1+ …+ kxk + u
In which of the following cases, the dependent variable is binary?
A. y indicates the gross domestic product of a country
B. y indicates whether an adult is a college dropout
C. y indicates household consumption expenditure
D. y indicates the number of children in a family
Answer: B
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In the above figure, the shift from AD1 to AD2 might have been the result of
A) an increase in government expenditure. B) a decrease in taxes. C) an increase in the quantity of money. D) All of the above answers are correct.
Policy-oriented economists seek to develop theories to
a. explain how things work so policies can be formulated. b. describe what happened in a particular time period in history. c. describe current economic events. d. find correlations between events. e. change people's values and ethics.