16. Which of the following statements is TRUE regarding the basic assin money de

Question

16. Which of the following statements is TRUE regarding the basic assin money demand regression model given above? a. E(uu) should be equal to zero for serial correlation t eor to assumptions of the b. E(u) should be equal to a constant value over time tot for exist in the m errors to be C. d. All statements are TRUE e. b and c statements are TRUE 17·The correlation coefficient is used to determine (a) the specified value the y-variable given a specitic Vae y-variable ific value the y-variable (c) the strength of the relationship between x and y variables (d) None of the above 18. I related to n regression, the equation that describes how the dependent variable y is the explanatory variable x is called (a) the regression model. (b) the correlation model. (c) is used to compute the correlation coefficient (d) is called the determinist model. cal equation 19. Regression model is a statistical framework used to develop a mathemati that describes how (a) one explanatory variable is related to one or more than one (b) one or response variables more than one response variables are related to a one or more than one explanatory variables (c) one response variable is related to one or more than one explanatory variables (d) all of the above statements are correct Regression analysis was employed to test whether the return on CAT's stock is determined by the return on the S&P; 500 market index. Using ordinary least squares method and monthly data over the period 1993:12-1999:04, the following equation was estimated: roar = 0.0015 + 1.143rs&P500; Based on the estimated CAPM equation, if the return on the market were to increase by 10% the rate of return on CAT's stock would (a) increase by 0.1 5% (b) increase by 11.43% (c) decrease by 11.43% 20. (d) decrease by 0.15% Regressing child mortality (CM) on per capita GNP (PGNP) and the female literacy rate (FLR) for a sample of 64 countries, regression results obtained are reported below with some additional information:

Explanation / Answer

Answer 16:

Option e. b and c statements regarding the assumptions of the error term are true.

Answer 17:

Option c. The correlation coefficient shows the strength of reltionship between x and y variables.

Answer 18:

Option a. The equation is known as regression equation showing the relationship between x and y variables.

Answer 19:

Option c. Regression model is used to develop a mathematical equation that describes how one response variable is related to one or more than one explanatory variables.

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