When We Estimate a Regression to Determine the Relationship Between

question 1

Multiple Choice

When we estimate a regression to determine the relationship between changes in consumption and changes in current income,we find that

• A)there are no residuals.
• B)the R2 is zero.
• C)the MPC is larger than one.
• D)all of the above
• E)none of the above

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Definitions:

Stock

Equity investment that represents ownership in a company and entitles the holder to a proportion of its profits.

Percentage Return

The increase or decrease in an investment, represented as a fraction of its initial cost and expressed as a percentage.

Preferred Stock

A type of stock that provides a fixed dividend that is paid before any dividends are paid to common stockholders and typically does not have voting rights.

Annual Dividend

The total dividends that a company pays to its shareholders out of its profits over the course of a year.