Given the Augmented Phillips Model: Y = β₀ + β₁x₁+β₂x₂

question 41

Multiple Choice

Given the augmented Phillips model: y = β₀ + β₁x₁+β₂x₂ +ε,where y = actual rate of inflation (%) ,x₁ = unemployment rate (%) ,and x₂ = anticipated inflation rate (%) .The response variable or variables(s) in this model is (are) the ___________________.

• A) unemployment rate
• B) actual inflation rate
• C) anticipated inflation rate
• D) unemployment rate and anticipated inflation rate

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