The assumptions underlying the simple linear regression model are:
a. the value of the dependent variable Y is postulated to be a random variable
b. a theoretical straight-line relationship exists between X and the expected value of Y
c. associated with each value of X is a probability distribution
d. the disturbance term is assumed to be an independent random variable
e. a through c
f. b through d
e
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With flexible exchange rates, central banks do not have to finance deficits because BOP equilibrium is restored by changes in exchange rates
Indicate whether the statement is true or false
Refer to the above figure. The market equilibrium quantity is Q1. Point Q2 represents the optimal amount of production. The government can achieve the optimal outcome by
A) setting the price at P3. B) providing a per-unit subsidy to consumers equal to P3 - P1. C) providing a per-unit subsidy to consumers equal to P2 - P1. D) establishing a tax equal to P2 - P1 per unit of the good sold.