Suppose One Runs the Regression of Y on X₁ and X₂

question 21

Multiple Choice

Suppose one runs the regression of Y on X₁ and X₂ and the coefficient on X₂ is positive. Which of the following correlation conditions must hold in the sample?

• A) Y and X₁ have a positive unconditional correlation.
• B) Y and X₂ have a positive unconditional correlation.
• C) The partial correlation between Y and X₂ holding X₁ constant must be positive.
• D) The semi-partial correlation between Y and X₂ holding X₁ constant must be positive.

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Definitions:

World Demand

The total demand for goods and services from all countries around the globe.

World Supply

The total amount of a particular good or service that is available to consumers globally.

World Price

The global market price of a commodity, determined by supply and demand factors across all participating countries.

Market Equilibrium

A situation in economics where the quantity of goods supplied is equal to the quantity of goods demanded at a specific price.