To test whether or not the population regression function is linear rather than a polynomial of order r,
A) check whether the regression R2 for the polynomial regression is higher than that of the linear regression.
B) compare the TSS from both regressions.
C) look at the pattern of the coefficients: if they change from positive to negative to positive, etc., then the polynomial regression should be used.
D) use the test of (r-1) restrictions using the F-statistic.
Answer: D
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If the price level changes from PL2 to PL1, what happens to the quantity of real GDP demanded?
a. It decreases from RGDP2 to RGDP1.
b. It increases from RGDP1 to RGDP2.
c. It decreases from RGDP1 to RGDP2.
d. It increases from RGDP2 to RGDP1.
The No-Cash-on-the-Table Principle states that there are:
A. never unexploited opportunities available to individuals in equilibrium. B. always unexploited opportunities available to individuals. C. never unexploited opportunities available to individuals. D. sometimes unexploited opportunities available to individuals in equilibrium.