At a price of $4 in the above figure

Suppose a developing country experiences a reduction in machinery and capital equipment as foreign entrepreneurs decrease the amount of investment in the economy. As a result,

A) the economy will move up along the long-run aggregate supply curve. B) the long-run aggregate supply curve will shift to the left. C) the long-run aggregate supply curve will shift to the right. D) the economy will move down along the long-run aggregate supply curve.

Your task is to estimate the ice cream sales for a certain chain in New England

The company makes available to you quarterly ice cream sales (Y) and informs you that the price per gallon has approximately remained constant over the sample period. You gather information on average daily temperatures (X) during these quarters and regress Y on X, adding seasonal binary variables for spring, summer, and fall. These variables are constructed as follows: DSpring takes on a value of 1 during the spring and is zero otherwise, DSummer takes on a value of 1 during the summer, etc. Specify three regression functions where the following conditions hold: the relationship between Y and X is (i) forced to be the same for each quarter; (ii) allowed to have different intercepts each season; (iii) allowed to have varying slopes and intercepts each season. Sketch the difference between (i) and (ii). How would you test which model fits the data the best? What will be an ideal response?