Bill Has Noticed That Increases in Unemployment Insurance Claims Are

question 41

Multiple Choice

Bill has noticed that increases in unemployment insurance claims are associated with recessions,and therefore advocates limits on unemployment insurance so as to prevent recessions.Martha has noticed that most drug addicts once attended schools,and therefore advocates getting rid of schools so as to prevent drug addiction.What do we know about the reasoning of Bill and Martha

• A)The reasoning of both Bill and Martha suffers from the omitted variable problem.
• B)The reasoning of both Bill and Martha suffers from the reverse causality problem.
• C)Bill's reasoning suffers from the reverse causality problem, and Martha's reasoning suffers from the omitted variable problem.
• D)Martha's reasoning suffers from the reverse causality problem, and Bill's reasoning suffers from the omitted variable problem.

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Definitions:

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business.

Operating Activities

Activities that relate to the primary, day-to-day operations of a business, such as selling products or providing services.

Prepaid Expenses

Assets on the balance sheet representing services or goods paid for upfront but not yet consumed.

Indirect Method

A technique used in cash flow statement preparation, adjusting net income for changes in non-cash accounts to arrive at operating cash flow.