Archives: Solution Manual

Basic Econometrics, Gujarati and Porter 182 CHAPTER 16: PANEL DATA REGRESSION MODELS 16.1 In cross-sectional data we gather information about several microunits at the same point in time. It is generally assumed that 16.2 In a fixed effects model (FEM) […]

Basic Econometrics, Gujarati and Porter CHAPTER 15: QUALITATIVE RESPONSE REGRESSION MODELS 15.1 The regression results based on dropping the 12 observations are: 1 ˆ1.246 0.120 ( 10.332) (17.454) i i i i X Y w w t = − + […]

Basic Econometrics, Gujarati and Porter 168 CHAPTER 14: NONLINEAR REGRESSION MODELS 14.1 If a regression model superficially looks nonlinear in the parameters but with suitable transformations can be linearized in the 14.2 If the error term is entered additively, the […]

Basic Econometrics, Gujarati and Porter CHAPTER 13: ECONOMETRIC MODELING: MODEL SPECIFICATION AND DIAGNOSTIC TESTING 13.1 Since the model appears to be grounded in economic theory, it seems to be well specified. However, the price variables are strongly correlated and could […]

Basic Econometrics, Gujarati and Porter 144 CHAPTER 12: AUTOCORRELATION: WHAT HAPPENS IF THE ERROR TERMS ARE CORRELATED? 12.1 (a) False. The estimators are unbiased but they are not efficient. 12.2 For n = 50 and k‘ = 4, and α […]

Basic Econometrics, Gujarati and Porter 127 CHAPER 11: HETEROSCEDASTICITY: WHAT HAPPENS WHEN ERROR VARIANCE IS NONCONSTANT? 11.1 (a) False. The estimators are unbiased but are inefficient. 11.2 (a) As equation (1) shows, as N increases by a unit, on average, […]

Basic Econometrics, Gujarati and Porter CHAPTER 10: MULTICOLLINEARITY: WHAT HAPPENS IF THE REGRESSORS ARE CORRELATED? 10.1 If X k is a perfect linear combination of the remaining explanatory variables, then there are (k-1) equations with k unknowns. With more unknowns […]

Basic Econometrics, Gujarati and Porter 91 CHAPTER 9: DUMMY VARIABLE REGRESSION MODELS 9.1 (a) If the intercept is present in the model, introduce 11 dummies. 9.2 (a) As per economic theory, the coefficients of X 2 , X 5 are […]

Basic Econometrics, Gujarati and Porter 71 CHAPTER 8: MULTIPLE REGRESSION ANALYSIS: THE PROBLEM OF INFERENCE 8.1 (a) In the first model, where sales is a linear function of time, the (b) The simplest thing to do is plot Y against […]

Basic Econometrics, Gujarati and Porter 61 7.1 The regression results are: 1 2 ˆ ˆ 3.00; 3.50 α α = − = 1 2 1 2 3 ˆ ˆ 4.00; 1.357 ˆˆˆ 2.00; 1.00; 1.00 λ λ β β β […]

Basic Econometrics, Gujarati and Porter 48 CHAPTER 6: EXTENSIONS OF THE TWO-VARIABLE LINEAR REGRESSION MODEL 6.1 True. Note that the usual OLS formula to estimate the intercept is 6.2 ( a ) & ( b ) In the first equation […]

Basic Econometrics, Gujarati and Porter 33 CHAPTER 5: TWO-VARIABLE REGRESSION: INTERVAL ESTIMATION AND HYPOTHESIS TESTING Questions 5.1 (a) True. The t test is based on variables with a normal distribution. (b) True. So long as E(u i ) = 0, […]

Basic Econometrics, Gujarati and Porter 30 CHAPTER 4: CLASSICAL NORMAL LINEAR REGRESSION MODEL (CNLRM) Appendix 4A Exercises 4.1 Given that the coefficient of correlation between Y 1 and Y 2 , ρ , is zero, the bivariate normal PDF reduces […]

Basic Econometrics, Gujarati and Porter 17 CHAPTER 3: TWO-VARIABLE REGRESSION MODEL: THE PROBLEM OF ESTIMATION 3.1 (1) Y i = 1 2 i i X u β β + + . Therefore, E(Y i i X ) = E[( 1 […]

Basic Econometrics, Gujarati and Porter CHAPTER 2: TWO-VARIABLE REGRESSION ANALYSIS: SOME BASIC IDEAS 2.1 It tells how the mean or average response of the sub-populations of Y varies with the fixed values of the explanatory variable (s). 2.2 The distinction […]

Basic Econometrics, Gujarati and Porter CHAPTER 1: THE NATURE OF REGRESSION ANALYSIS 1.1 (a) These rates (%) are as follows. They are year-over-year, starting with 1981. USA Canada Japan France Germany Italy UK 1980 1981 10.32 12.48 4.84 13.28 6.34 […]

Part 4/Macroeconomics Examination 521 Advancement Placement Level Macroeconomics Examination 1. Which of the following correctly describes the components of aggregate demand? (A) consumption expenditures + investment expenditures + government expenditures + exports + imports (B) consumption expenditures + investment expenditures […]

396 Part 3/ Microeconomics Examination Advancement Placement Level Microeconomics Examination 1. A production possibility curve might be shifted outward by each of the following EXCEPT (A) an increase in immigration. (B) a movement toward a more open approach to free […]

311 Special Topic 12 Difficult Environmental Cases and the Role of Government OUTLINE I. Government Regulation and the Environment A. When it is difficult to assign and enforce private property rights, markets often results in outcomes that are inefficient. 1. […]

307 Special Topic 11 The Question of Resource Exhaustion OUTLINE I. Doomsday Forecasts A. Forecasts that the world will soon run out of various key resources have been made for centuries. 1. These forecasts have consistently been wrong. II. Why […]

303 Special Topic 10 Do Labor Unions Increase the Wages of Workers? OUTLINE I. Union Membership as a Share of the Workforce A. Union Membership Trend 1. Since the mid-1950s, union membership has declined. 2. It declined slowly as a […]

301 Special Topic 9 Earnings Differences Between Men and Women OUTLINE I. Employment Discrimination and Earnings of Women A. Besides employment discrimination, differences in specialization within the family, educational choices, and career goals contribute to the gender earnings gap. II. […]

295 Special Topic 8 The Economics of Health Care OUTLINE I. Structure of the Health Care Industry A. Spending on health care has soared in recent decades. 1. Measured as a share of the economy, total health care spending has […]

291 Special Topic 7 The Federal Budget and National Debt OUTLINE I. Deficits, Surpluses, and the National Debt A. The national debt (the sum of the outstanding bonds of the U.S. Treasury) is increased by budget deficits and reduced by […]

287 Special Topic 6 Lessons from the Great Depression OUTLINE I. The Economic Record of the Great Depression A. Large reductions in output 1. Real GDP plunged during 1929-1933 2. After a modest recovery during 1934-1936, real GDP fell again […]

283 Special Topic 5 The Crisis of 2008: Causes and Lessons for the Future OUTLINE I. The Crisis of 2008 A. The headlines of 2008 were about falling housing prices, rising default and foreclosure rates, failure of large investment banks, […]

281 Special Topic 4 Great Debates in Economics: Keynes Versus Hayek OUTLINE I. Keynes and Hayek A. Keynes and Hayek 1. John Maynard Keynes and Friedrich Hayek are giants in the economics profession. Their theories and ideas represent contrasting alternative […]

277 Special Topic 3 The Stock Market: Its Function, Performance, and Potential as an Investment Opportunity OUTLINE I. The Economic Functions of the Stock Market A. The stock market provides investors, including those who are not interested in participating directly […]

273 Special Topic 2 The Economics of Social Security OUTLINE I. Introduction to the U.S. Social Security Program A. Offers protection against the loss of income that usually accompanies old age or the death of a breadwinner. B. It is […]

269 Special Topic 1 Government Spending and Taxation OUTLINE I. Government Expenditures A. Government spending includes both purchases of goods and services and income transfers. 1. About three-fifths of government spending takes place at the federal level. Four categories income […]

507 Teaching Unit VI: International Economics. Unit VI entails the content area of Open Economy: International Trade and Finance (Content Area VII, A-D) 1 I. Plan Teaching Materials Instructors Manual Text readings Gaining from International Trade, Chapter 17 Chapter 18, […]

Part 4/Unit V 495 2003- identify expansionary OMO and shows SR effects on AS/AD price levels and output as well as interest rates 2004, impact of federal deficit on loanable fund markets and impact on real interest rate with economic […]

Part 4/Unit V 483 Teaching Unit V: Stabilization & Growth Policies: Unit V entails the content area of Inflation, Unemployment, and Stabilization Policies (Content Area V, A-B) and Economic Growth and Productivity (Content Area VI, A-D) 1 I. Plan (Four […]

Part 4/Unit IV 469 I. Plan Teaching Materials Instructors Manual Text readings Chapter 13, Money and the Banking System Chapter 12, Money and the Banking System Chapter 14, Modern Macroeconomics and Monetary Policy Chapter 13, Modern Macroeconomics and Monetary Policy […]

458 Part 4/Unit III 2006, use an AS/AD graph to show a short run equilibrium below FE; output and price levels; evaluate the impact of an increase in an input cost on the AS/AD model and explain impact on SRAS, […]

Teaching Unit III: Models of Economic Performance. Unit III entails the content area of National Income and Price Determination as detailed in the AP* Economics Course Description1 (Content Area III, A-C) TEACHER NOTE: Short run stabilization policies, or fiscal policy, […]

437 Teaching Unit II: Measuring Economic Performance. The second unit of instruction entails the content area of Measurement of Economic Performance as detailed in the AP* Economics Course Description1 (Content Area II, A-C) I. Plan Teaching Materials Instructors Manual Coursebook […]

Part 4/Unit I 427 2008, draws graph showing impact of an effective price ceiling on price and quantity Sample Multiple-Choice Questions for Macro Unit I 1. The central economic problem faced by all economies of the world is (A) balancing […]

416 Part 4 AP Macroeconomics This section has six parts. Each of the first five parts corresponds to a unit on the AP Macroeconomics exam. Each unit part provides a syllabus outline for teaching the unit, information regarding the concepts […]

Teaching Unit V- Factor Markets. The fifth unit of instruction entails the content areas of Fac- tor Markets as detailed in the AP* Economics Course Description1 (Content Area III, A-D) and includes topics of Market Failure and the Role of […]

370 Part 3/Unit IV recognize ATC pricing, MC pricing, and monopolist pricing strategies, given a novel mo- Tasks related to oligopoly and game theory predict impact on prices given two collusive firms recognize conditions of an oligopoly industry/firm analyze the […]

Teaching Unit IV. Market Structures: Price Takers & Price Searchers. The fourth unit of in- struction entails the content areas of Nature and Functions of Product Markets, as detailed in the AP* Economics Course Description1 (Content Area II, D and […]

Teaching Unit III: The third unit of instruction entails the content areas of Nature and Functions of Product Markets, as detailed in the AP* Economics Course Description1 (Content Area II, C-D) I. Plan NOTE: Chapters and pages in (parenthesis) denote […]

Teaching Unit II : The Market The second unit of instruction entails the content areas of The Nature and Functions of Product Markets as detailed in the AP* Economics Course Description1 (Content Area II, A-B) and includes topics of Market […]

313 Part 3 AP Microeconomics This section has six parts. Each of the first five parts corresponds to a unit on the AP Microeconom- ics exam. Each unit part provides a syllabus outline for teaching the unit, information regarding the […]

263 Chapter 28 (15 Micro) Income Inequality and Poverty OUTLINE I. How Much Income Inequality Exists in the United States A. Inequality in Money Income in the United States B. A Closer Look at Factors Influencing Income Distribution 2. Young, […]

251 Chapter 27 (14 Micro) Investment, the Capital Market, and the Wealth of Nations OUTLINE I. Why People Invest A. Capital and Investment 1. Types of capital: 2. Investment: purchase, consumption, or development of a capital resource. 3. Saving is […]

Chapter 26 (13 Micro) Earnings, Productivity, and the Job Market OUTLINE 1. Why Do Earnings Differ? A. Earnings would be equal if: 1. all individuals were identical. 2. all jobs were equally attractive. 3. workers were perfectly mobile among jobs. […]

Chapter 25 (12 Micro) The Supply and Demand for Productive Resources OUTLINE 1. Introduction A. Productive assets are bought and sold in resource markets. B. These markets help determine what is produced, how it is produced, and the distribution of […]

Chapter 24 (11 Micro) Price-Searcher Markets with High Entry Barriers OUTLINE I. Why Are Entry Barriers Sometimes High? A. Entry Barriers 1. Economies of Scale 2. Government Licensing 3. Patents 4. Control Over an Essential Resource II. Characteristics of Monopoly […]