In Explaining the Income Earned by College Graduates,which of the Following

question 10

Multiple Choice

In explaining the income earned by college graduates,which of the following independent variables is best represented by a dummy variable?

• A)Grade point average
• B)Age
• C)Number of years since graduating from high school
• D)College major

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Definitions:

Income Effect

Variations in the income levels of an individual or the broader economy, and how these variations influence the demand for specific goods or services.

Purchasing Power

Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another.

Relative Prices

The price of one good or service compared to another, often used to indicate the value or cost-effectiveness between different items.