To decide whether Yi = ?0 + ?1X + ui or ln(Yi) = ?0 + ?1X + ui fits the data better, you cannot consult the regression R2 because
A) ln(Y) may be negative for 0
C) the slope no longer indicates the effect of a unit change of X on Y in the log-linear model.
D) the regression R2 can be greater than one in the second model.
Answer: B) the TSS are not measured in the same units between the two models.
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If a $10 sales tax is imposed on a good and the equilibrium price increases by $10, the tax is
A) split between buyers and sellers but not evenly. B) paid fully by sellers. C) paid fully by buyers. D) split evenly between buyers and sellers. E) perhaps split between buyers and sellers but it is impossible to determine the incidence without further information.
The country of Kemper is on its aggregate production function at point W in the above figure. If the population increases with no change in capital or technology, the economy will
A) move to point such as Y. B) remain at point W. C) move to point such as X. D) move to point such as Z.
M2 money includes all but which one of the following?
a. Checkable deposits. b. Savings accounts. c. Large denomination time deposits. d. Money market deposit accounts. e. Money market mutual accounts.
For this question, assume that policy makers are pursuing a fixed exchange rate regime and that output is initially less than the natural level of output. The economy will tend to move toward the natural level of output when which of the following occur?
A) an increase in the price level B) a devaluation of the currency C) an increase in the domestic interest rate D) a reduction in the foreign price level E) none of the above