Omitted Variables

question 81

Multiple Choice

Omitted variables

• A)can cause hypothesis tests to be unreliable.
• B)require multiple regression analyses to find.
• C)are usually those with t-statistics less than the critical value.
• D)are usually outside the confidence interval.

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Definitions:

Liquidity Trap

An environment characterized by high savings rates and low interest rates, which renders efforts to stimulate economic growth through monetary policy ineffective.

Reserve Ratio

The Reserve Ratio is the fraction of total deposits that a bank is required to hold in reserve and not lend out, a critical tool in monetary policy used to control the money supply.

Deposit Expansion Multiplier

A ratio that measures the maximum amount of money a bank can create with a given level of reserves.

Currency

A system of money in general use in a particular country or economic context.