The Random Effects Approach _____

question 13

Multiple Choice

The random effects approach _____.

• A)cannot be used if the key explanatory variable is constant over time
• B)is preferred to pooled OLS because RE is generally more efficient
• C)is suitable if the Hausman test rejects the assumption that the unobserved effect is uncorrelated with the explanatory variables
• D)is more convincing than fixed effects for policy analysis using aggregate data

---

Definitions:

Corporation

A legal entity that is separate from its owners, offering limited liability to its shareholders, and is capable of entering contracts, suing and being sued.

Account Payable

The sum of funds that a business needs to pay back to its vendors or lenders for products or services bought on a credit basis.

Account Receivable

Debts owed by customers to a company for items or services that have been dispatched but not compensated.

Asset

Assets held by a company or person anticipated to yield economic advantages in the future.