The forecasting technique which attempts to forecast short-run changes and makes use of economic indicators known as leading, coincident or lagging indicators is known as:
If two alternative economic models are offered, other things equal, we would
tend to pick the one with the lowest R2.
select the model that is the most expensive to estimate.
pick the model that was the most complex.
select the model that gave the most accurate forecasts
The variation in an economic time-series which is caused by major expansions or contractions usually of greater than a year in duration is known as:
unpredictable random factor
Consumer expenditure plans is an example of a forecasting method. Which of the general categories best described this example?
time-series forecasting techniques
survey techniques and opinion polling
The type of economic indicator that can best be used for business forecasting is the:
current business inventory indicator
The use of quarterly data to develop the forecasting model Yt = a +bYt?1 is an example of which forecasting technique?
Survey and opinion
Econometric methods based on an understanding of the underlying economic variables involved
Purchasing power parity or PPP says the ratios composed of:
interest rates explain the direction of exchange rates.
growth rates explain the direction of exchange rates.
inflation rates explain the direction of exchange rates.
services explain the direction exchange rates.
public opinion polls explain the direction of exchange rates.
If Ben Bernanke, Chair of the Federal Reserve Board, begins to tighten monetary policy by raising US interest rates next year, what is the likely impact on the value of the dollar?
The value of the dollar falls when US interest rates rise.
The value of the dollar rises when US interest rates rise.
The value of the dollar is not related to US interest rates.
This is known as Purchasing Power Parity or PPP.
If the British pound (?) appreciates by 10% against the dollar:
both the US importers from Britain and US exporters to Britain will be helped by the appreciating pound.
the US exporters will find it harder to sell to foreign customers in Britain.
the US importer of British goods will tend to find that their cost of goods rises, hurting its bottom line.
both US importers of British goods and exporters to Britain will be unaffected by changes in foreign exchange rates.
Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because
out-of-pocket costs of production decline
free trade areas protect infant industries
economies of scale are present
manufacturers face diminishing returns
more goods are available for consumption
Using demand and supply curves for the Japanese yen based on the $/¥ price for yen, an increase in US INFLATION RATES would
Decrease the demand for yen and decrease the supply of the yen.
Increase the demand for yen and decrease the supply of the yen.
Increase the demand and increase the supply of yen.
Decrease both the supply and the demand of yen.
Have no impact on the demand or supply of the yen.
An increase in the exchange rate of the U.S. dollar relative to a trading partner can result from
higher anticipated costs of production in the U.S.
higher interest rates and higher inflation in the U.S.
higher growth rates in the trading partner’s economy
a change in the terms of trade
lower export industry productivity
The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time
reduce the competitive pressure on prices
lower the value of the currency in the country with the higher inflation rate
increase foreign aid
increase the speculative demand for the currency
The isoquants for inputs that are perfect substitutes for one another consist of a series of:
Marginal factor cost is defined as the amount that an additional unit of the variable input adds to ____.
marginal rate of technical substitution
The combinations of inputs costing a constant C dollars is called:
an isocost line
an isoquant curve
an isorevenue line
Given a Cobb-Douglas production function estimate of .72K.18 for a given industry, this industry would have:
increasing returns to scale
constant returns to scale
decreasing returns to scale
negative returns to scale
Which of the following is never negative?
marginal rate of technical substitution
slope of the isocost lines
The primary purpose of the Cobb-Douglas power function is to:
allow one to make estimates of cost-output relationships
allow one to make predictions about a resulting increase in output for a given increase in the inputs
aid one in gaining accurate empirical values for economic variables
calculate a short-run linear total cost function
According to the theory of cost, specialization in the use of variable resources in the short-run results initially in:
decreasing returns and declining average and marginal costs
increasing returns and declining average and marginal costs
increasing returns and increasing average and marginal costs
decreasing returns and increasing average and marginal costs
What method of inventory valuation should be used for economic decision-making problems?
current replacement cost
cost or market, whichever is lower
For a short-run cost function which of the following statements is (are) not true?
The average fixed cost function is monotonically decreasing.
The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum.
The marginal cost function intersects the average variable cost function where the average variable cost function is a minimum.
The marginal cost function intersects the average total cost function where the average total cost function is a minimum.
The existence of diseconomies of scale (size) for the firm is hypothesized to result from:
imperfections in the labor market
imperfections in the capital markets
problems of coordination and control encountered by management
Economies of Scope refers to situations where per unit costs are:
Unaffected when two or more products are produced
Reduced when two or more products are produced
Increased when two or more products are produced
Demonstrating constant returns to scale
Demonstrating decreasing returns to scale
The cost function is:
a means for expressing output as a function of cost
a schedule or mathematical relationship showing the total cost of producing various quantities of output
similar to a profit and loss statement
incapable in being developed from statistical regression analysis