15. Which of the following statements is TRUE regarding the basic assumptions of

Question

15. Which of the following statements is TRUE regarding the basic assumptions of the money demand regression model given above? a. E(uule) should be equal to zero for serial correlation to exist in the model. b. E(u) should be equal to a constant value over time for the errors to be homoscedastic. d. All statements are TRUE b and c statements are TRUE 16. The correlation coefficient is used to determine e. (a) the specified value the y-variable given a specific value the x-variable (b) the specified value the x-variable given a specific value the y-variable (c) the strength of the relationship between x and y variables (d) None of the above

Explanation / Answer

16.

Correct Answer:

C.

Explanation:

The value of correlation coefficient lies between -1 and + 1. The +1 shows the maximum and positive strength of the relationship between the two variables. On a similar note, -1 shows the negative relationship of highest strength between the two variables. the coefficient of 0 shows that there is no correlation between the given two variables.

Pl. provide the money demand regression model for the Q 15 (as mentioned) to solve it.

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