Suppose you estimate a population regression function where Y represents the hom

Question

Suppose you estimate a population regression function

where Y represents the home mortgage interest rate in percent (values like 6.2),
X1 represents the income of the homeowner in thousands of dollars,
X2 represents the down payment on the home in thousands of dollars and
X3, X4 and X5 represent the region of the country in which the homeowner resides (X3 = 1 if homeowner is from Northeast; X4 = 1 if homeowner is from South, X5 = 1 if homeowner is from Midwest (the omitted region is West)).

In the population regression function above, the units of 2 will be:

a) Percent

b)Thousands of dollars per percent

c) Percent per thousands of dollars

d) Thousands of dollars

e)None of the above

Explanation / Answer

X2 represents the down payment on the home in thousands of dollars and thus 2 wil have units of Y divided by X2, which is c) Percent per thousands of dollars

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