Consider the Interaction Model $E ( y ) = 3.6 + 1.2 x _ { 1 } + 2.4 x _ { 2 } + .2 x _ { 1 } x _ { 2 }$

question 85

Multiple Choice

Consider the interaction model $E ( y ) = 3.6 + 1.2 x _ { 1 } + 2.4 x _ { 2 } + .2 x _ { 1 } x _ { 2 }$ . Determine the change in $E ( y )$ when $x _ { 1 }$ is changed from 6 to 7 and $x _ { 2 }$ is held fixed at 3 .

• A) 4.2
• B) 10.8
• C) 11.4
• D) 1.8

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Definitions:

Consumer Price Index

A metric that investigates the aggregate average cost of a selection of consumer products and services, covering areas such as transportation, food, and medical services.

Disinflation

A slowdown in the rate of inflation, indicating a decrease in the pace at which prices are rising.

Deflation

A decrease in the general price level of goods and services, often indicating a reduction in the supply of money or credit in the economy.

Stagflation

A situation in an economy where inflation rates are high, economic growth rate slows, and unemployment remains steadily high, presenting a challenge to economic policy.