The following simple model is used to determine the annual savings of an individual on the basis of his annual income and education. Savings = β₀ + ₀ Edu + β₁Inc + u
The variable 'Edu' takes a value of 1 if the person is educated and the variable 'Inc' measures the income of the individual.

Refer to the model above. The benchmark group in this model is _____.

Question

The following simple model is used to determine the annual savings of an individual on the basis of his annual income and education. Savings = β₀ +

The following simple model is used to determine the annual savings of an individual on the basis of his annual income and education. Savings = β<sub>0</sub> + <sub>0</sub> Edu + β<sub>1</sub>Inc + u The variable 'Edu' takes a value of 1 if the person is educated and the variable 'Inc' measures the income of the individual. Refer to the model above. The benchmark group in this model is _____. A) the group of educated people B) the group of uneducated people C) the group of individuals with a high income D) the group of individuals with a low income

₀ Edu + β₁Inc + u
The variable 'Edu' takes a value of 1 if the person is educated and the variable 'Inc' measures the income of the individual.

Refer to the model above. The benchmark group in this model is _____.

Quizplus · Accepted Answer

The benchmark group in this model is the group of uneducated people (when Edu=0), as they serve as the reference point for comparison. The coefficient β₀ represents the difference in savings between educated and uneducated individuals, holding income constant. The coefficients β₁ and eb6b8a_02b9_9ebf_bf83_b95d88f8f3c3_TB8272_11 represent the effect of income on savings for uneducated and educated individuals, respectively.

The Following Simple Model Is Used to Determine the Annual