THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 106

Multiple Choice

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
Consider the following model: Y = β₀ + β₁X_1t + β₂X_2t + γY_t-1.Suppose we increase X₁ by one unit in time period t,with all other independent variables in the model held fixed.
-What is the total expected increase in the dependent variable over time period t and all future time periods?

• A)β₁ / (1 - γY_t-1)
• B)1 / (1 - γ)
• C)β₁ / (1 - γ)
• D)(1 - γβ₁)/ (1 - γ)^t

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