The model: y* = ₀ + x + u, given u|x ˜ Normal(0, ²) and y = max(0, y*) represents a: A)ARCH model. B)GARCH model C)Tobit model D)logit model

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This is a Tobit model because it has a censoring mechanism where the y variable is truncated at zero. The u term follows a normal distribution with mean 0 and variance that is dependent on x. There is no evidence of conditional heteroskedasticity or time-varying volatility, which rules out GARCH and ARCH models. There is no indication of a binary dependent variable or a logit link function, which eliminates the logit model.

The Model: Y* = 0​ + X

The Model: Y* = ₀ + X