The Following Simple Model Is Used to Determine the Annual

question 15

Multiple Choice

The following simple model is used to determine the annual savings of an individual on the basis of his annual income and education. Savings = β₀ + ₀ Edu + β₁Inc + u
The variable 'Edu' takes a value of 1 if the person is educated and the variable 'Inc' measures the income of the individual.
​
​
Refer to the above model. If ₀ > 0, _____.

• A)uneducated people have higher savings than those who are educated
• B)educated people have higher savings than those who are not educated
• C)individuals with lower income have higher savings
• D)individual with lower income have higher savings

---

Definitions:

Outstanding Stock

The number of shares that have been issued by a company and are held by investors, including both public shareholders and company insiders or officers.

Common Stock

A form of corporate equity ownership, a type of security representing a claim on part of the company's assets and earnings.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with dividend payment preferences.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares of stock rather than cash.