Question

Question 3 Consider the following estimated equation QOL = 207 + 0.81 WB+ 0.33 MW + 0.12 RM (2015) (0.421) (0.012) (0.005) n = 100, R = 0.79, R20.778 where QOL represents quality of life, WB represents well-being, MW represents log of minimum wage and RM represents log of remittances. QOL and WB are measured on a scale from 0 to 100 percent, while MW and RM are measured in dollars. Standard errors are in parentheses. (a) Interpret the coefficient on RM. [2 marks] (b) Interpret R. (2 marks (e) Holding MW and RM fixed at 0, what is quality of life predicted to be if well-being is 5%? 3 mark) (d) Test the mall hypothesis that the coefficient on MW is one against the alternative that the coefficient is less than one. 15 marks (e) Test the null hypothesis that the coefficient ou RM is zero against the alternative that the coefficient is greater than er at the level 15 marks (1) Test the overall significance of the model 15 marks

Answer 1

classmate Date Page coefficient on RM = 0.12, AS RM remittances Increased by 1 percent, Quality of life Increases by 0-12 percent. b) R² 0079 that to The coefficient of determination R: 79% exptautis predicts explanatory variables such as WB, MW, RM are able to explain only 79% of the variation in Quality of life Index. of WB = 5% MW=&m In QOL = 2007 +0.81 WB + 0.33MW +0.12 RM 2007 +0.81 (5) + 0.33 (0 +0.12 (0) QOL 6.12 Quality of life is predicted to be 6-12% Hos Bmw = Ha. Bmw <1 = +55.8 -55.83 = 55.837 2 t-statistic = 0.33-1 0.012 Since t-statistic value is quite high, we reject say BMW that <1 null hypothesis and Scanned by TapScanner