Given the augmented Phillips model: y = β₀ + β₁x₁+β₂x₂+ε,where y = actual rate of inflation (%),x₁ = unemployment rate (%),and x₂ = anticipated inflation rate (%).The response variable or variables(s)in this model is (are)the ___________________. A) unemployment rate B) actual inflation rate C) anticipated inflation rate D) unemployment rate and anticipated inflation rate

Question

Quizplus · Accepted Answer

The response variable in the augmented Phillips model is the actual rate of inflation, represented by the variable y. The unemployment rate and anticipated inflation rate are the predictor variables in the model. Therefore, the best choice is B, which represents the actual inflation rate.

Given the Augmented Phillips Model: Y = β0 + β1x1+β2x2

Given the Augmented Phillips Model: Y = β₀ + β₁x₁+β₂x₂