Estimation of the IV regression model
A) requires exact identification.
B) allows only one endogenous regressor, which is typically correlated with the error term.
C) requires exact identification or overidentification.
D) is only possible if the number of instruments is the same as the number of regressors.
Answer: C) requires exact identification or overidentification.
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When the velocity of circulation equals 4 in 2010, this fact means that
A) consumers held four dollars in wealth for each dollar they spent in 2010. B) on average, each dollar of money in the economy purchased four dollars of goods and services in GDP in 2010. C) for each additional dollar of money injected into the economy, the price level rose 4 percent in 2010. D) real output of goods and services in GDP rose by four dollars for each additional dollar of money consumers saved.
Unlike the mercantilists, who argued that a nation could only gain at the expense of other nations because not all nations could simultaneously run trade surpluses, Smith maintained that with free trade, international specialization of resources in production leads to an increase in world output that can be shared by trading partners.
Indicate whether the statement is true or false