THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 178

Multiple Choice

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
A loan officer is interested in examining the determinants of the total dollar value of residential loans made during a month.She used Y = β₀ + β₁X₁ + β₂X₂ + β₃X₃ + β₄X₄ + ε to model the relationship,where Y is the total dollar value of residential loans in a month (in millions of dollars) ,X₁ is the number of loans,X₂ is the interest rate,X₃ is the dollar value of expenditures of the bank on advertising (in thousands of dollars) ,and X₄ is a dummy variable equal to 1 if the observation is either June,July,or August.
-Suppose that she obtained = 3.8 + 0.23x₁ - 1.31x₂ + 0.032x₃ + 1.05x₄ by using data from the past 24 months.How would we interpret the coefficient on x₄?

• A)On an average,we would expect an additional 1.05 loans per month during June,July,and August.
• B)On an average,we would expect an additional $1.05 million in loans during June,July,and August.
• C)On an average,we would expect an additional 1.05% increase in loans during June,July,and August.
• D)There is no difference in the total residential loan amount between the months of June and September.

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Definitions:

Equilibrium Quantity

The quantity of goods or services supplied is exactly equal to the quantity demanded at the market price.

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at a given price.

Tax Revenue

Income that is gained by governments through taxation, used to fund public services and government obligations.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded, typically downward sloping to the right.