THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
A loan officer is interested in examining the determinants of the total dollar value of residential loans made during a month.She used Y = β 0 + β 1 X 1 + β 2 X 2 + β 3 X 3 + β 4

+ ε to model the relationship,where Y is the total dollar value of residential loans in a month (in millions of dollars),X 1 is the number of loans,X 2 is the interest rate,and X 3 is the dollar value of expenditures of the bank on advertising (in thousands of dollars).Suppose that by using data from the past 24 months,she obtained
= 3.8 + 0.23x 1 - 1.31x 2 + 0.032x 3 - 0.0005
.
-What do these results suggest about the relationship between the total loan amount and number of loans?
A)As the number of loans increases,the total loan amount at first decreases,then increases.
B)As the number of loans increases,the total loan amount also increases.
C)As the number of loans increases,the total loan amount at first increases,then decreases.
D)As the number of loans increases,the total loan amount decreases at a decreasing rate.

Question

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
A loan officer is interested in examining the determinants of the total dollar value of residential loans made during a month.She used Y = β 0 + β 1 X 1 + β 2 X 2 + β 3 X 3 + β 4

+ ε to model the relationship,where Y is the total dollar value of residential loans in a month (in millions of dollars),X 1  is the number of loans,X 2 is the interest rate,and X 3 is the dollar value of expenditures of the bank on advertising (in thousands of dollars).Suppose that by using data from the past 24 months,she obtained  
= 3.8 + 0.23x 1 - 1.31x 2 + 0.032x 3 - 0.0005  
.
-What do these results suggest about the relationship between the total loan amount and number of loans?
A)As the number of loans increases,the total loan amount at first decreases,then increases. 
B)As the number of loans increases,the total loan amount also increases. 
C)As the number of loans increases,the total loan amount at first increases,then decreases. 
D)As the number of loans increases,the total loan amount decreases at a decreasing rate.

Quizplus · Accepted Answer

The coefficient for X₁ is positive (0.23), suggesting that as the number of loans increases, the total loan amount also increases.