15. Suppose you are hired by the MOH to study the determinants of child health. In additionto several factors which can be measured quantitatively each child falls in one incomequintile from first quintile (Q1)—the poorest 20% of the household population to thefifth quintile (Q5)—the wealthiest 20%. How many dummy variables should be includedin the regression equation for income?A. 7B. 5C. 6D. 416. In the following equation, GDP refers to gross domestic product, and FDI refers toforeign direct investment. In(GDP) = 2.65 +0.222ln(BANKCREDIT) + 0.527FDIWhich of the following statements is then true?A. If GDP increases by 1%, bank credit increases by 0.222%, the level of FDI remainingconstant.B. If bank credit increases by 1%, GDP increases by 0.222%, the level of FDI remainingconstant.C. If GDP increases by 1%, bank credit increases by log(0.222)%, the level of FDIremaining constant.D. If bank credit increases by 1%, GDP increases by log(0.222)%, the level of FDIremaining constant.17. The following model predicts annual savings of individuals on the basis of annual incomeand bank account ownership.SAVINGS = Bo+ B₁BACCOUNT + B₂INCOME+u.The variable 'BACCOUNT' takes a value of 1 if the person owns a bank account and 0 ifthe person has no bank account. INCOME is income of the individual. The inclusion ofanother binary variable in this model that takes a value of 1 if a person has no bankaccount and 0 if the person has a bank account, will give rise to the problem ofA. omitted variable biasB. autocorrelationC. perfect collinearityD. heteroskedastcity18. In a regression based on 30 annual observations, farm income was related to fourindependent variables-grain exports, government subsidies, population, and a dummyvariable for bad weather years. The model was fitted by least squares, resultingin a Durbin-Watson statistic(d) = 1.12. which decision and conclusion is correct?A. Reject Ho at 5% significance level and conclude that the error terms has positiveautocorrelationB. Do not reject Ho at 5% significance level and conclude that the error terms haspositive autocorrelationC. Reject Ho at 5% significance level and conclude that the error terms has negativeautocorrelationD. Do not reject Ho at 5% significance level and conclude that the error terms hasnegative autocorrelation

A dummy variable is a binary (0/1) variable used in statistical models to represent a categorical…

15. Suppose you are hired by the MOH to study the determinants of child health. In addition to several factors which can be measured quantitatively each child falls in one income quintile from first quintile (Q1)—the poorest 20% of the household population to the fifth quintile (Q5)-the wealthiest 20%. How many dummy variables should be included in the regression equation for income? A. 7 B. 5 C. 6 D. 4

15. Suppose you are hired by the MOH to study the determinants of child health. In addition to several factors which can be measured quantitatively each child falls in one income quintile from first quintile (Q1)—the poorest 20% of the household population to the fifth quintile (Q5)-the wealthiest 20%. How many dummy variables should be included in the regression equation for income? A. 7 B. 5 C. 6 D. 4

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.15P

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