A Test Is Conducted in 22 Cities to See If

question 40

Multiple Choice

A test is conducted in 22 cities to see if giving away free transit system maps will increase the number of bus riders.In a regression analysis,the dependent variable Y is the increase in bus riders (in thousands of persons) from the start of the test until its conclusion.The independent variables are X1 = the number (in thousands) of free maps distributed and a binary variable X2 = 1 if the city has free downtown parking,0 otherwise.The estimated regression equation is Y = 1.32 + 0.0345X1 − 1.45X2.In city 3,the observed Y value is 7.3,X1 = 140,and X2 = 0.The residual for city 3 (in thousands) is

• A)6.15
• B)1.15
• C)4.83
• D)1.57

---

Definitions:

Pesos

The official currency of Mexico and several other Latin American countries.

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to estimate the exchange rate at which two currencies will be at parity, or have the same purchasing power.

Nominal Exchange Rate

The nominal exchange rate is the rate at which one country's currency can be exchanged for another country's currency without adjustment for inflation.

Price Level

A measure of the average prices of goods and services in an economy over a period of time.