THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 28

Essay

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
In a study of foreign holdings in Egyptian banks,the following sample regression results were obtained,based on 14 annual observations:
= -3.25 +
-
+
,and R² = 0.92,
Where the numbers in parentheses under the coefficient estimates are the estimated coefficient standard errors,and
y = Year-end share of assets in Egyptian bank subsidiaries held by foreigners,as a percentage of total assets
x₁ = Annual change,in billions of Egyptian pounds,in foreign direct investment in Egypt
x₂ = Bank price-earnings ratio
x₃ = Index of the exchange value of the Egyptian pounds
-Test the null hypothesis that β₃ is zero,against the alternative that it is positive at the 5% significance level,and interpret your result.

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Definitions:

Imports

Goods or services brought into a country from abroad for sale.

Inverse Demand

A mathematical representation of demand that expresses price as a function of quantity demanded, typically showing how the price will adjust to achieve market equilibrium.

Cournot Duopolists

Firms in a duopoly (a market with only two producers) following Cournot competition, where each firm decides its production level assuming the other's decision as given.

Total Cost

The complete cost of producing a specific number of goods or services, including both fixed and variable costs.