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- The IS-LM model is a simplification of the interrelationship between selected economic variables. The model consists of a number of en- dogenous variables (those variables whose values are determined inside the model) and a number of exogenous variables (those variables whose values are determined outside the model). The labour markets mostly consider the relationships between prices, expected prices, unemploy- ment among other macroeconomic variables. (a) Explain endogenous and exogenous variables in the IS-LM model as well as the labour markets, derive the AD-AS model.In the United States, one of the largest welfare programs is the Supplemental NutritionAssistance Program (SNAP) representing the second largest in-kind transfer programfor individuals in the US. From the abstract of the study we are told “[a] 1% increasein benefits per population raises grocery prices by a persistent 0.08%. A calibratedpartial-equilibrium model implies a marginal benefit dollar raises a recipient’s consumersurplus from groceries by $0.7, producer surplus by $0.5, and lowers each non-SNAPconsumer’s surplus by $0.05.” In other words, increasing the size of the in-kind transferleads to higher prices. This higher price results in a larger surplus for grocery stores anda lower consumer surplus for individuals not participating in SNAP. Those individualswho participate in SNAP can increase their overall consumer surplus as they haveaccess to more goods, despite the higher price. This result is estimated using thenearly 100% redemption of the SNAP benefits (i.e. assuming the…Suppose that in a linear regression model hourly wages are explained as a function of gender, where the dummy variable female takes on a value of 1 if the worker is a female and O otherwise: SRL : wâge 25 + 2 * female Which interpretation(s) are correct for this SRL? An additional female worker increases hourly wages by 2 dollars on average. Men earn on average 25 dollars per hour. Women earn on average two dollars more per hour than men. Women are the baseline group.
- How would you interpret the slope coefficient of the following regression output given that X represents individual height in centimeters and Y represents wages in rands/hour. Ỹ; = -33 + 4.3X₂ O A. On average, when an individual's height is zero, they pay their employer R33 per hour. O B. On average, taller individuals earn higher wages. O C. On average, for each one centimeter increase in height, a given individual will lower their wage by R4.3 per hour. OD. On average, for each centimeter in height, an individual will increase their wage by -33 + R4.3 per hour. O E. On average, when an individual reduces their height by one centimeter, they necessarily increase their wages by R4.3 per hour.The President of Ghana launched the COVID-19 business alleviation program incollaboration with the National Board for Small Scale Industries (NBSSI), TradeAssociations, and some selected banks. Under the program, the government is givingfunds without interest to selected financial institutions for onward lending to businessesat a 3% interest. The program is aimed at helping beneficiaries to sustain their businesses during the Covid-19 pandemic. Use this information to answer the followingquestions.a. Explain in your own words, the monetary policy tool being used by thegovernment under this program. b. If the government had pegged the interest rate under the program at the monetary policy rate, will this have been a better way of setting the rate?Explain the advantages and disadvantages of each scenario. c. Explain the expected impact of the low-interest rate program on grossdomestic product (GDP), articulating the possible pathways.Short Answer 2 Consider the market equilibrium model on the regression practice prob- lems where prices and quantities are determined jointly by the intersection of the supply and demand curves. We showed that, in this case, OLS of Q on P does not recover the supply nor demand elasticity. A solution to this endogeneity problem is an instrument. One popular instrument for a firm's price setting decision is the characteristics of products produced by rival firms. Why do you think such an instrument would be relevant? Do you think such an instrument would satisfy the exclusion restriction? Why?
- d/My courses / Faculty Of Economics & Administratiive Sciences / ECON309 / Finals / ECON 309 Fin 13. In the simple linear regression model, the regression slope a. O a. indicates by how many percent Y increases, given a one percent increase in X. ut of O b. represents the elasticity of Y on X. uestion Oc. when multiplied with the explanatory variable will give you the predicted Y. O d. indicates by how many units Y increases, given a one unit increase in X. nageConsider the following model of the factors that influence a person's annual wage: Y = β0 + β1X1 + β2X2 + β3X1X2 + β4X3 + u where Y = annual wage, in dollars X1= years of formal education X2 = age, in years X3 = variable equal to 1 if male, 0 otherwise U = error term Which of the following is the interpretation of β1 alone? The effect of X1 on Y when X2 = 0 The effect of X1 on Y when X2 is at its median value. The effect of X1 on Y, holding all else equal. The effect of X1 on Y when X2 is at its mean value.Who Invented Instrumental Variables Regression?
- What are the consequences for including a proxy for an omitted variable?Application. The outbreak of the bubonic plague- the Black Death- in 1348 reduced the population of Europe by about one-third within a few years, which resulted in a massive reduction in the labor force during the plague years. Suppose the outbreak of the bubonic plague- the Black Death- in 1348 did not cause the TEP. parameter to fall (this is a reasonable assumption for simplicity as the effect of the fall in TFP was much less significant than the effect of the massive reduction in the labor force during the Black Death, so the effect of the fall in TFP was negligible compared with the massive reduction in the labor force during the Black Death). Using the complete intertemporal model developed in class, brieáy explain the eşects of the outbreak on the equilibrium values of real wage, output, real interest rate, consumption, investment, and the price level.D2) Economics In the R program, with what code is the vector outoregressive model found? (for daily return)