If Ability Is Positively Related to Schooling, Then Estimating the Returns

question 18

Multiple Choice

If ability is positively related to schooling, then estimating the returns to education directly from the wage-schooling profile will likely

• A) underestimate the return to schooling.
• B) overestimate the return to schooling.
• C) underestimate the average wage.
• D) overestimate the average wage.
• E) underestimate the average discount rate.

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Definitions:

Certified Cheque

A cheque guaranteed by a bank, indicating that the signer has enough funds in their account to cover the amount of the cheque.

Bills Of Exchange Act

A law that governs the creation, transfer, and effects of a bill of exchange, which is a written order used in international trade requiring one party to pay a fixed sum of money to another party on demand or at a predetermined date.

Drawer

In the context of checks and negotiable instruments, the entity that writes and signs a check, instructing the bank to pay the stated amount to the party named on the document.

Payee

The party in a financial transaction who receives the payment.