1 - The following table gives hypothetical annual monetary aggregate . M1 , along with the consumer price Index for each year. Year Monetary CPI aggregate . M1 (in millions of dollars ) 2000 48.198 130.66 2001 546,810 136.17 2002 564.555 140.31 2003 593.752 144.48 2004 625,483 148.23 (a ) Calculate the real value of the money supply for the years shown (b) Find the percent change in tax collections from past year to the current one, for both nominal and real values. What do you notice about the two set of numbers ? Year Percent Percent Change for Change for Nominal money Real money supply supply 1990 1991 1992 1993 1994 (c ) What would happen if you used the nominal values in a regression instead of the real values that you found in part (a)? 2. Can regression analysis prove or imply causality ? 3. Let y = household food expenditure and x = household income. Determine which of the following are linear regression model and which are nonlinear regression models (a) y = B+ Bx'+ (b) y = Pxk +e (c) y = exp ( B + 8, x + 2 ) (d) y = exp ( 8 + 8 x ) + e