Investment =
6.682 - 4.319 Interest rate
Se
(1.22)
(1.33)
; R = 0.528
1. Interprete this regression.
2. How would you interprete Rº?
3. Does the negative value of interest rate make any economic sense? What is the
underlying economic theory?
4. Suppose I want to introduce a new variable for the above equation, that is Investment
subsidy. Now what will be the sign of the coefficient of Investment Subsidy?
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Answer:
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