(Requires Advanced Material)Only One of the Following Models Can Be $Y = A K ^ { \alpha } L ^ { \beta } + u$

question 25

Short Answer

(Requires advanced material)Only one of the following models can be estimated by OLS : a. $Y = A K ^ { \alpha } L ^ { \beta } + u$ .
b. $\operatorname { Pr } ( Y = 1 \mid X ) = \Phi \left( \beta _ { 0 } + \beta _ { 1 } X \right)$ .
c. $\operatorname { Pr } ( Y = 1 \mid X ) = F \left( \beta _ { 0 } + \beta _ { 1 } X \right) = \frac { 1 } { 1 + e ^ { - \left( \beta _ { 0 } + \beta _ { 1 } X \right) } }$ .
d. $Y = A K ^ { \alpha } L ^ { \beta } u$ .

---

Definitions:

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Canadian Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, calculated by Statistics Canada.

Annual Rate of Inflation

The percentage increase in the cost of goods and services over a one-year period.

Equivalent Annual Rate

The interest rate that is annualized using compounding over a given period, making it comparable across different compounding frequencies.