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:

BFOQ Defense

A legal justification used by employers to hire based on specific characteristics, like sex or age, that are normally prohibited by discrimination laws, when it's deemed reasonably necessary to the operation of the business or job.

Fair Labor Standards Act

United States federal law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments.

Minimum Wages

The lowest legal hourly rate of pay that employers can compensate workers, as mandated by federal or state law.

Defined Benefit Plans

A type of pension plan where an employer promises a specified pension payment upon retirement, based on an employee's earnings history, tenure of service, and age.