Given the augmented Phillips model: ,where y = actual rate of inflation (%),x₁ = unemployment rate (%),and x₂ = anticipated inflation rate (%).The response variable(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 (%), which is represented by variable y. Therefore, the best choice is B, which represents the actual inflation rate.

Given the Augmented Phillips Model: ,Where Y = Actual