For This Question, Use the California Testscore Data Set and Your

question 42

Essay

For this question, use the California Testscore Data Set and your regression package (a spreadsheet program if necessary). First perform a multiple regression of testscores on a constant, the student-teacher ratio, and the percent of English learners. Record the coefficients. Next, do the following three step procedure instead: first, regress the testscore on a constant and the percent of English learners. Calculate the residuals and store them under the name resYX2. Second, regress the student-teacher ratio on a constant and the percent of English learners. Calculate the residuals from this regression and store these under the name resX1X2. Finally regress resYX2 on resX1X2 (and a constant, if you wish). Explain intuitively why the simple regression coefficient in the last regression is identical to the regression coefficient on the student-teacher ratio in the multiple regression.

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Definitions:

Real Cost of Borrowing

The total expense of taking out a loan, including interest payments and any additional fees, adjusted for inflation.

Wealth Redistribution

The transfer of income, wealth, or property among individuals or groups, often implemented through policies by governments to improve economic equality.

Quantity Equation

An equation that relates the quantity of money in an economy to the nominal value of economic output, often used in monetary theory to predict inflation.

Money Supply

The total capital resources in monetary terms within an economy at a certain time.