Economic Theory Provides a Basis for Which Variables Are Relevant

question 8

Multiple Choice

Economic theory provides a basis for which variables are relevant and should be included in an econometric model.But econometrics provides tools to estimate ____________________ which tells us ________________________________.

• A)a model,the functional form that should be used.
• B)causality,why it happens that way
• C)a parameter,how much or to what degree things change.
• D)variables,the probability of a specific outcome.

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Definitions:

Primary Economic Environment

The main economic setting in which a company operates and carries out its operations, often determined by its reporting currency and major market.

Local Overseas Currency

The official money or legal tender used in a country other than one's own, especially in the context of international trade or travel.

Functional Currency

The currency of the primary economic environment in which an entity operates, and in which it typically generates and expends cash.

Parent's Cash Flows

The cash inflows and outflows directly associated with the primary operating entity in a group of companies or conglomerate.