Instruction 16-3
to Explain Personal Consumption (CONS) Measured in Dollars

question 43

Multiple Choice

Instruction 16-3
To explain personal consumption (CONS) measured in dollars, data is collected for
$\begin{array}{|l|l|}\hline\text { INC: } & \text { personal income in dollars } \\\hline \text { CRDTLIM: } & \begin{array}{l}\text { \$1 plus the credit limit in dollars available to } \\\text { the individual }\end{array} \\\hline \text { APR: } & \begin{array}{l}\text { average annualised percentage interest rate } \\\text { for borrowing for the individual }\end{array} \\\hline & \begin{array}{l}\text { per person advertising expenditure in dollars } \\\text { by manufacturers in the city where the } \\\text { ADVT: }\end{array} \\\hline \text { GENDER: } & \text { gender of the individual; } 1 \text { if female, } 0 \text { if male }\\\hline \end{array}$
A regression analysis was performed with CONS as the dependent variable and log(CRDTLIM) , log(APR) , log(ADVT) and GENDER as the independent variables. The estimated model was
= 2.28 ? 0.29 log(CRDTLIM) + 5.77 log(APR) + 2.35 log(ADVT) + 0.39 GENDER
-Referring to Instruction 16-3,and noting that ADVT has been transformed using the log transformation,what is the correct interpretation for the estimated coefficient for ADVT?

• A) A 1% increase in per person advertising expenditure by the manufacturer will result in an estimated mean increase of 2.35% on personal consumption holding other variables constant.
• B) A 100% increase in per person advertising expenditure by the manufacturer will result in an estimated mean increase of $2.35 on personal consumption holding other variables constant.
• C) A $1 increase in per person advertising expenditure by the manufacturer will result in an estimated mean increase of $2.35 on personal consumption holding other variables constant.
• D) A 100% increase in per person advertising expenditure by the manufacturer will result in an estimated mean increase of 2.35% on personal consumption holding other variables constant.

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Definitions:

Phase Angle

The angle or phase difference between two waveforms or signals, often measured in degrees.

Circuit Current

The flow of electric charge in a complete or partial electrical circuit.

Series RC

A circuit configuration where a resistor and a capacitor are connected in a linear sequence, affecting the overall impedance and phase angle.

Capacitive Reactances

The opposition to current flow presented by a capacitor, dependent on the frequency of the applied AC signal and the capacitor's value.