TABLE 15-1
to Explain Personal Consumption (CONS) Measured in Dollars $\text {INC: personal income indollars}$

question 34

Multiple Choice

TABLE 15-1
To explain personal consumption (CONS) measured in dollars, data is collected for
$\text {INC: personal income indollars}$
$\text {CRDTLIM: \( \$ 1 \) plus the credit limit in dollars}$
$\text { available to the individual }$
$\text { APR: average annualized percentage interest rate for borrowing for the individual}$

$\text {ADVT: perperson advertisingexpenditure in dollars by manufacturers in the city where the individual lives}$

$\text { SEX: gender of the individual: 1 if female, 0 if male}$

A regression analysis was performed with CONS as the dependent variable and ln(CRDTLIM) , ln(APR) , ln(ADVT) , and SEX as the independent variables. The estimated model was
y^{^} = 2.28 - 0.29 ln(CRDTLIM) + 5.77 ln(APR) + 2.35 ln(ADVT) + 0.39 SEX

-Referring to Table 15-1, what is the correct interpretation for the estimated coefficient for APR?

• A) A 100% increase in average annualized percentage interest rate will result in an estimated average increase of $5.77 on personal consumption holding other variables constant.
• B) A one percentage point increase in average annualized percentage interest rate will result in an estimated average increase of $5.77 on personal consumption holding other variables constant.
• C) A 100% increase in average annualized percentage interest rate will result in an estimated average increase of 5.77% on personal consumption holding other variables constant.
• D) A 1% increase in average annualized percentage interest rate will result in an estimated average increase of 5.77% on personal consumption holding other variables constant.

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Definitions:

Accounting For Inventories

The process of tracking and managing the goods a company holds for the purpose of sale or production, including valuation and cost determination.

Perpetual Inventory System

An accounting method that records inventory purchases and sales in real time through continuous updates to inventory accounts.

LIFO Assumption

An inventory costing method that assumes the last items purchased are the first ones sold (Last In, First Out).

FIFO Assumption

Stands for First-In, First-Out, an inventory costing assumption where the first items purchased are the first ones to be sold.