Use table to answer questions hereunder:

YEAR	EXRATE	INFL	IRATE
1990	2,6	14,3	21,0
1991	2,8	15,3	20,3
1992	2,9	13,9	18,9
1993	3,3	9,7	16,2
1994	3,6	8,9	15,6
1995	3,6	8,7	17,9
1996	4,3	7,4	19,5
1997	4,6	8,6	20,0
1998	5,5	6,9	21,8
1999	6,1	5,2	18,0
2000	6,9	5,3	14,5
2001	8,6	5,7	13,8
2002	10,5	9,5	15,8
2003	7,6	5,7	15,0
2004	6,5	-0,7	11,3
2005	6,4	2,1	10,6
2006	6,8	3,2	11,2
2007	7,0	6,2	13,2
2008	8,3	10,1	15,1
2009	8,5	7,2	11,7
2010	7,3	4,1	9,8
2011	7,3	5,0	9,0
2012	8,2	5,7	8,8
2013	9,7	5,8	8,5
2014	10,9	6,1	9,1
2015	12,8	4,5	9,4
2016	14,7	6,6	10,5
2017	13,3	5,2	10,4
2018	13,2	4,5	10,1
2019	14,4	4,1	10,1
2020	16,5	3,2	7,7
2021	14,8	4,6	7,0

1.1 Which of the following statements is/are correct? According to the OLS method (in the case of = + :

A) 1 = /

B) 0 = () + 1. ()

C) 1 = [ ] [ 2 ]

[1] a

[2] a and c

[3] b

[4] b and c

[5] Not [1], [2], [3] or [4]

1.2 Which of the following statements is/are correct?

A) The degrees of freedom = 30

B) The sample average of INF = 665

C) The sample average of EXRATE is 8.1

[1] a and b

[2] a, b and c

[3] b and c

[4] a and c

[5] Not [1], [2], [3] or [4]

1.3 Which of the following statements is/are correct?

A) 2 = 366.9

B) = 220.6

C) 2 = 459.05

[1] a and b

[2] b and c

[3] a and c

[4] a, b and c

[5] Not [1], [2], [3] or [4]

1.4 Which of the following statements is/are correct?

A) 1 = 0.601 (rounded to 3 decimals)

B) 0 = 12.097 (rounded to 3 decimals)

C) 1 = 6.65 (rounded to 2 decimals)

[1] a and b

[2] b and c

[3] a

[4] b

[5] Not [1], [2], [3] or [4]

1.5 Which of the following statements is/are correct?

A) 1990 = 2.877 (rounded to 3 decimals)

B) 2006 = 10.146 (rounded to 3 decimals)

C) = = ( ()) 2

[1] a and b

[2] b and c

[3] a

[4] b

[5] Not [1], [2], [3] or [4]

1.6 Which of the following statements is/are correct?

a 5 = 2.99 (rounded to 2 decimals)

b = 0

c 2 = 356.82

[1] a and b

[2] a and c

[3] a, b and c

[4] b and c

[5] Not [1], [2], [3] or [4]

1.7 Which of the following statements is/are correct?

a The larger the sample size then the smaller (1) will be.

b The larger the sample size then the larger (1) will be.

c = 2 = 489.45

[1] b

[2] a and b

[3] a, b and c

[4] b and c

[5] a and c

1.8 Which of the following statements is/are correct? If 1 = 0.601 then this means that

A) if INF increases by 1 unit, then decreases by 0.601 unit of local currency

B) if INF increases by 1% then decreases by 0.601 percent

C) if EXRATE increases by 1 unit, then INF decreases by 0.601 percent.

[1] a

[2] a and b

[3] c

[4] b

[5] Not [1], [2], [3] or [4]

1.9 Which of the following statements is/are correct?

A) 2 = 1 ()

B) 2 = 0.271 (rounded to 3 decimals)

C) If an additional X variable is included in the regression equation EXRATE=b0+b1INF, then 2 is likely to increase.

[1] a and b

[2] a, b and c

[3] b and c

[4] a and c

[5] Not [1], [2], [3] or [4]

1.10 Which of the following statements is/are correct? Assume that the estimated regression equation = + has a R2 = 0.87. This

A) implies that 13% of the variation of EXRATE is explained by the variation of INF

B) confirms that the estimated equation fits the data well.

C) proves that changes in INF cause changes in EXRATE.

[1] a

[2] b

[3] a and b

[4] a, b and c

[5] Not [1], [2], [3] or [4]

Questions 1.11 to 1.12 require you to estimate the regression equation = + + (equation 2) where EXRATE and INF are the same as in Table 1 and IRATE is the real deposit rate of interest.

In this equation, inflation and interest rates are determinants of exchange rates.

Use Excel's Add-in to estimate equation 2

1.11 Which of the following statements is/are correct regarding the coefficient estimates of equation 2?

A) 0 = 17.327 (rounded to 3 decimals)

B) 1 = 0.0096 (rounded to 4 decimals)

C) 2 = 0.689 (rounded to 3 decimals)

[1] a and b

[2] a and c

[3] b and c

[4] a, b and c

[5] Not [1], [2], [3] or [4]

1.12 Which of the following statements is/are correct in respect of the estimates of equation 2?

A) ( 1) = 1.567 (rounded to 3 decimals)

B) 2 changed from 0.25 (equation 1) to 0.54 (equation 2, both rounded to 2 decimals).

C) The change in 2 caused by the inclusion of IRATE in regression equation 2 indicates that there is merit in including IRATE.

[1] a, b and c

[2] a and c

[3] b and c

[4] a and b

[5] c