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© 2014 Pearson Canada Inc."
A basic principle in economics is that ____ does not necessarily imply ____.
A) correlation; causation
B) correlation; significance
C) causation; correlation
D) Both A and C
Answer: A
Diff: 3 Type: MC Page Ref: 641
Skill: Recall
Objective List: 25.1 Express the different types of empirical evidence
Reverse causation between money and aggregate output is likely to be a problem when a
central bank targets ____.
A) a monetary aggregate
B) an interest rate
C) the exchange rate
D) the inflation rate
Answer: B
Diff: 2 Type: MC Page Ref: 641
Skill: Recall
Objective List: 25.1 Express the different types of empirical evidence
The reduced form approach ____ the way monetary policy affects the economy and
may be ____ likely to spot the full effect of changes in M on Y.
A) does not restrict; more
B) restricts; more
C) does not restrict; less
D) restricts; less
Answer: A
Diff: 3 Type: MC Page Ref: 641
Skill: Recall
Objective List: 25.1 Express the different types of empirical evidence
A disadvantage of ____ evidence is that it cannot rule out ____.
A) reduced-form, reverse causation
B) reduced-form; adverse selection
C) structural model; reverse causation
D) structural model; adverse selection
Answer: A
Diff: 3 Type: MC Page Ref: 641
Skill: Recall
Objective List: 25.1 Express the different types of empirical evidence