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Explain how the IS curve can be derived. (Use the equation derivation method).
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- Briefly describe the concept of VIF (what is it, why do we use it) and explain how to calculate VIF in a model with 3 independent variables.3. Consider the following model of car sales: In (qnc)= B, + B, In(price)+ Bme In (income)+ u where qnc is the number of cars sold (in thousands), price is the average price of new cars (in $1,000), and income is the per capita income (in $1,000). Give the economic interpretation of the parameters Bo, Bpand Bine. What sign do you expect these parameters to have?2. Question 2: Suppose that you estimate a model of the aggregate annual retail sales of new cars that specifies that sales of new cars are a function of real disposable income, the average retail price of a car adjusted by the consumer price index, and the number of sports utility vehicles sold (you decide to add this independent variable to take account of the fact that some potential new car buyers purchase sports utility vehicles instead). You use the data (annual from 2000 to 2014) and obtain the following estimated regression equation: CARS, = 1.32 + 4.91Y D; + 0.0012 PRICE, - 7.14 SUV (2.39) (0.00045) (71.40) 1 where CARS = new car sales (in hundreds of thousands of units) in year t, YD; = real disposable income (in hundreds of billions of dollars), PRICE = the average real price of a new car in yeart (in dollars), SUV = the number of sports utility vehicles sold in year t (in millions). You expect the variable YD to have a positive coefficient and the variables PRICE and SUV to…
- Using the data in the worksheet "HoneyData" create a correlation table using the Analysis Toolpack in Excel. Using this information, answer the following questions and round your numeric answer to 2 decimal places. The correlation between Production and Average Price is: This means that honey Production and Average Price are negatively/positively correlated. An Increase in Production is associated with an increase/decrease in Average Prices.Name and discuss the factors that shift the IS Curve. Give two examples, with the help of a diagram, of IS curve shifting, one to the left and one to the right.The slope of the graph y=x^2-3x+7 at the point (1,5) is . . . a. -1 b. -2 c. 5 d. 11
- 7. The Stata data set "college_gpa" has data on students' college GPAS, high school GPAS, ACT scores, lectures skipped during the academic year, and other characteristics. We wish to examine the predictors of college GPAS. You must submit your do-file (commands). a) Regress college GPA on high school GPA and write the estimated regression line. b) Interpret the intercept of your regression in a sentence. Does this coefficient make sense?n Explain c) Interpret the coefficient on high school GPA in a sentence. Does this coefficient make sense? Explain. reg colGPA hsGPA Source df MS Number of obs 141 %3D F(1, 139) 33.80 Model 5.58478164 1 5.58478164 Prob > F e.0000 Residual 22.9668501 139 .165229138 R-squared Adj R-squared 0.1956 %3D 0.1898 %3D Total 28.5516318 140 .203940227 Root MSE .40648 colGPA Coef. Std. Err. t P>|t| [95% Conf. Interval] hsGPA .6242948 .1073816 5.81 0.000 .4119822 .8366073 _cons 890254 3669263 2.43 0.017 6477554- The manager of Collins Import Autos believes the number of cars sold in a day(Q) depends on two factors: (1) the number of hours the dealership is open (H) and (2) the number of salespersons working that day (S ). After collecting data for two months (53 days), the manager estimates the following log-linear model: Q = aHbSc ----- a. Explain how to transform this log-linear model into a linear form that can be estimated using multiple regression analysis. b. How do you interpret coefficients b and c? If the dealership increases the number of salespersons by 20 percent, what will be the percentage increase in daily sales? c. Test the overall model for statistical significance at the 5 percent significance level.The accompanying table shows the average annual wage for a country, in thousands of dollars, for selected years from 1970 and projected to 2040. a. Find an exponential function that models these data, with x equal to the number of years after 1970 and y equal to the average annual wage in thousands of dollars. b. Graph the model and the data on the same axes. c. What does the model predict that the average annual wage will be in 2030? Is this interpolation or extrapolation? d. When does the model predict that the average annual wage will reach $230,000? a. The equation of an exponential function that models the data is y=. (Use integers or decimals for any numbers in the expression. Round to three decimal places as needed.) b. Graph the model on the same axis as the data. Choose the correct graph below. All graphs are shown in a [0,70,10] by [0,250,50] viewing window. OA. OB. c. According to the model, the average annual wage in 2030 will be $ thousand. (Round to one decimal place as…
- 5. Confounding variables and multiple regressions Suppose you are interested in studying the effect of square footage on the price of houses. You propose the following regression of housing prices on square footage: price - Bo + P sqft + u where price the price of the house. sqft = the square footage of the house residual Failing to account for the number of bathrooms in a house, which may influence housing prices and may be positively correlated with square footage, could lead to estimate of the effect . This issue of confounding variables would likely bias the estimate ofConstruct the following graphs for the US economy using the data from FRED, BEA, and BLS websites. Select the period from 1945 (subject to data availability) until the most recent year available. You have to create each graph three different times by utilizing the data from the three different websites. Be sure to indicate the source of data for each graph. Nominal GDP and real GDP levels on the same graph (two curves on the same graph) Real GDP growth rate Unemployment rate Price Index (CPI or GDP deflator) Inflation rateName and discuss the factors that shift the IS Curve. Give two examples, with the help of a diagram, of IS curve shifting, one to the left and one to the right.
