The Following Regression Model Was Estimated to Forecast the Value

question 56

Multiple Choice

The following regression model was estimated to forecast the value of the Malaysian ringgit (MYR) :
MYR_t = a₀+ a₁INCt _-1 + a₂INFt _-1 + m_t,
Where MYR is the quarterly change in the ringgit, INF is the previous quarterly percentage change in the inflation differential, and INC is the previous quarterly percentage change in the income growth differential. Regression results indicate coefficients of a₀ = .005; a₁ = .4; and a₂ = .7. The most recent quarterly percentage change in the inflation differential is -5%, while the most recent quarterly percentage change in the income differential is 3%. Using this information, the forecast for the percentage change in the ringgit is:

• A) 4.60%.
• B) -1.80%.
• C) 5.2%.
• D) -4.60%.
• E) none of the above

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Definitions:

Diapedesis

Passage of blood or any of its formed elements through the intact walls of blood vessels.

Margination

The process by which leukocytes move to the periphery of blood vessel walls in response to inflammation or infection.

Bilirubin

A yellow compound formed by the breakdown of hemoglobin in red blood cells, processed by the liver, and can indicate health issues when found in high concentrations in the bloodstream.

Globin

Protein portion of hemoglobin.