Consider the population model2. PNG

where GPA is college GPA (in a semester), X is a vector of exogenous explanatory variables, SAT is SAT score, S is total hours spent studying during the semester, and e is an error term. You have access to a large random sample of students (indexed by i) from a single university . Assume that X and SATare exogenous. Suppose that you are interested in estimating ?.

(a) (5 pts) What does ? represent in this model?

(b) (15 pts) Evaluate estimating the above relationship using OLS. Suppose that you are primarily interested in estimating ?.

(c) (20 pts) Now, suppose that at this university , all students are are randomly assigned to dorms. Dorms are varying distances (di) from the center of campus, where all classes are held (in person only!). Explain how to use this variable to obtain a consistent estimate of ?, if it is possible. Clearly state any assumptions that you make. Be sure to justify, in detail, why your approach is valid. If this new variable is not useful, simply

state that it is not useful.

(d) (20 pts) Now, suppose that you have access to data that tracks students over time, so that GPAitrepresents the semester (not cumulative) GPA of student i in semester t, and Sitrepresents hours studied by student i in semester t. The variables Xi and SATi are constant over time. You don't have the distance variable anymore. The number of students in the data is very large, and you have 8 semesters of data for each student. Adapt the model in Equation (1) to make use of the new data. If possible, explain how to obtain a consistent estimate of ?. Clearly state any assumptions that you make. If it's not possible to get a consistent estimate of ?, simply state this.

(e) (20 pts) Suppose now that you have a new dataset from a large sample of graduates from this university: wage at age 30, total hours studied during college, cumulative college GPA at graduation, and Xiand SATias described above. In addition, you know that all graduates with a GPA > 3.7 graduate with honors. This achievement is noted prominently on their official transcript. Identify an interesting economic question that you can answer using these data, and clearly state it. Write down an empirical model and explain specifically how you would estimate it. Clearly state any assumptions that you make.

C QUESTION 1 The equation of exchange shows that O The money demand times money velocity equals real GDP. The money demand times money velocity equals nominal GDP. The money supply times money velocity equals nominal GDP. The money supply times money velocity equals real GDP. QUESTION 2Lecture 2 Answer the following questions based on the components of GDP. Question 1: If businesses are accumulating more goods in inventories the effect on Investment will be: C" it will depend on the duality.F ofthe goods going into inventory. 0 decreases in investment. C" no change to investment. 0 increases to investment. Blackboard QUESTION 5 1 points Save Anew Table 12-17 TAX A TAX B TAX C TAX D INCOME AMOUNT OF TAX AMOUNT OF TAX AMOUNT OF TAX AMOUNT OF TAX $50,000 312 500 (259%] 315,000 (309%) $10.000 (2014) 316 000 30%) 100,000 $25,000 (259%) 525.000 (25%) 1325.000 (25%%) $15,000 (1915) 200.000 350.000 (25%) $40.000 (2096) 380,000 (3096) $15,000 7 5461 Refer to Table 12-17. A proportional tax is illustrated by tax O &C. Ob. A O c. B. Od.D. Remaining Time: 17 minutes, 56 s QUESTION 6 w Question Completion Status: Which of the following contributes to the projected rise in government spending on Social Security and Medicare as a percentage of GDP? a. Increasing life expectancyes Ob. Falling fertility rates c. Increasing health care costs d. All of the above are correct. 1 points Saw QUESTION 7 Vertical equity states that taxpayers with a greater ability to pay taxes should a. contribute a larger amount than those with a lesser ability to pay. Ob be less subject to tax distortions that lead to deadweight losses. Oc. contribute a decreasing proportion of each increment in income to taxes. O d. be less subject to administrative burdens of a tax. 1 points QUESTION 8 ments on taxpayers are said to haveQuestion 2 [1 point] Suppose Japan's economy operates according to Okun's law, with actual GDP = Y200 trillion and actual unemployment = 2 5 percent. If the natural rate of unemployment is 4%, what is potential GDP? Question 3 [6 points] You are given the following information about an economy that is experiencing an investment boom. Consumption 3000 Investment 1200 Government purchases 1500 Net exports X-M -500 Net foreign income 100 Government taxes 1000 Full employment GDP - 5000 and the natural rate of employment is 6%%. (a) Calculate GDP and the current account [I point] (b) Calculate private savings and national savings [! point ] (c) Use Okun's law to calculate the level of unemployment [1 point] (d) Suppose the boom ends and consumption falls by 300, imports fall by 500, investment falls by 250, Government spending declines by 250 and taxes decline by 100. Calculate what happens to GDP, the current account, and national savings. [2 points] (c) Explain whether a large current account deficit is good or bad for the economy in this case, and why. [1 point] Question 4 [2 points] Briefly describe the main differences between the neoclassical and Keynesian models. You should include comments on what they assume about prices and labour supply. What is the effect of positive demand shocks such as an increase in government spending on output and prices in the two models?Using collecting evidence through empirical research is the only way to can be proven. QUESTION 13 In scientific research the cannot be observed QUESTION 14 We are born with all of these we will ever have. QUESTION 15