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Note: NGDP = nominal GDP (current dollars in billions).

RGDP = real GDP (1992 billions of dollars). Source: Economic Report of the President, 1999, Tables B-1 and B-2, pp. 326-328.

Note: NGDP = nominal GDP (current dollars in billions).

RGDP = real GDP (1992 billions of dollars). Source: Economic Report of the President, 1999, Tables B-1 and B-2, pp. 326-328.

100 PART ONE: SINGLE-EQUATION REGRESSION MODELS

e. From your results what can you say about the nature of inflation in the United States over the sample period?

3.24. Using the data given in Table I.1 of the Introduction, verify Eq. (3.7.1).

3.25. For the S.A.T. example given in exercise 2.16 do the following:

a. Plot the female verbal score against the male verbal score.

b. If the scatterplot suggests that a linear relationship between the two seems appropriate, obtain the regression of female verbal score on male verbal score.

c. If there is a relationship between the two verbal scores, is the relationship causal?

3.26. Repeat exercise 3.24, replacing math scores for verbal scores.

3.27. Monte Carlo study classroom assignment: Refer to the 10 X values given in Table 3.2. Let fi1 = 25 and fi2 = 0.5. Assume u ^ N(0, 9), that is, u are normally distributed with mean 0 and variance 9. Generate 100 samples using these values, obtaining 100 estimates of fa and fa2. Graph these estimates. What conclusions can you draw from the Monte Carlo study? Note: Most statistical packages now can generate random variables from most well-known probability distributions. Ask your instructor for help, in case you have difficulty generating such variables.