If One Ran the Regression on Whether a Mortgage Applicant

question 13

Multiple Choice

If one ran the regression on whether a mortgage applicant was approved for a loan or not (Approved_i) on their income to debt ratio, this would be an example of what sort of model?

• A) A two-stage least squares model
• B) A fixed-effects model
• C) A within estimator model
• D) A linear probability model

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Definitions:

Common Resource

A resource, like air or water, that is accessible to all members of a society but subject to overuse and depletion.

Negative Externalities

Costs suffered by a third party due to an economic transaction they were not involved in.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Marginal Social Benefit

The additional benefit to society from consuming one more unit of a good or service, considering both private and external benefits.