You Are Interested in Determining the Factors That Determine the Wealth

question 43

Multiple Choice

You are interested in determining the factors that determine the wealth of a person and assume that the age of a person may have a non-linear effect on wealth.You run the following regression: Y = β₀ + β₁X₁ + β₂X₂ + β₃


+ β₄X₃ + ε where Y is the total wealth and X₂ is the person's age.What would be your H₀ regarding β₂ and β₃?

• A)β₂ > 0 and β₃ > 0
• B)β₂ < 0 and β₃ < 0
• C)β₂ > 0 and β₃ < 0
• D)β₂ < 0 and β₃ > 0

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