Instruction 16-1
to Explain Personal Consumption (CONS)measured in Dollars,data Is

question 14

Multiple Choice

Instruction 16-1
To explain personal consumption (CONS) measured in dollars,data is collected for
$$\begin{array}{l}\begin{array} {|l|l|} \hline \text {INC }&\text { personal income in dollars}\\\hline&\text {\( \$ 1 \) plus the credit limit in dollars available to the }\\\text { CRDTLIM}&\text { individual}\\\hline&\text {average annualised percentage interest rate for }\\\text {APR: }&\text {borrowing for the individual }\\\hline&\text {per person advertising expenditure in dollars by }\\&\text { manufacturers in the city where the }\\\text {ADVT: }&\text {individual lives }\\\hline\text {GENDER:}&\text {gender of the individual; 1 if female, 0 if male}\\\hline \end{array}\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 16-1,and noting that ADVT has been transformed using the log transformation,what is the correct interpretation for the estimated coefficient for APR?

• A)A 1% increase in mean annualised percentage interest rate will result in an estimated mean increase of 5.77% on personal consumption holding other variables constant.
• B)A one percentage point increase in mean annualised percentage interest rate will result in an estimated mean increase of $5.77 on personal consumption holding other variables constant.
• C)A 100% increase in mean annualised percentage interest rate will result in an estimated mean increase of $5.77 on personal consumption holding other variables constant.
• D)A 100% increase in mean annualised percentage interest rate will result in an estimated mean increase of 5.77% on personal consumption holding other variables constant.

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