In the Binary Dependent Variable Model, a Predicted Value of 0.6

question 2

Multiple Choice

In the binary dependent variable model, a predicted value of 0.6 means that

• A)the most likely value the dependent variable will take on is 60 percent.
• B)given the values for the explanatory variables, there is a 60 percent probability that the dependent variable will equal one.
• C)the model makes little sense, since the dependent variable can only be 0 or 1.
• D)given the values for the explanatory variables, there is a 40 percent probability that the dependent variable will equal one.

---

Definitions:

Q Falls

Indicates a decrease in the quantity demanded or supplied of a good or service, often in response to changes in price, income, or other factors.

GDP

Gross Domestic Product, the total market value of all final goods and services produced within a country in a given period.

Stock of Money

The total quantity of money available within an economy at a specific time, including cash, bank deposits, and liquid financial instruments.

Velocity of Circulation

The rate at which money is exchanged from one transaction to another, and how much a unit of currency is used in a given period.