Print out the regression and answer each of the following questions for the regression run.

1. Evaluate this result with respect to its economic meaning, over-all fit, and the signs and significance of the individual coefficients.

2. What econometric problems does this regression have?

   Income could be irrelevant, or its coefficient could be negatively biased due to an omitted variable. Before you go too far, though, review the theory behind PROPK.

    

3. Which of the following statements comes closest to your recommendation for further action to be taken in the estimation of this equation?
   1. No specification changes are advisable (go to the next section).
   2. No variable changes are advisable, but I am concerned about heteroskedasticity or serial correlation (go to the next section).
   3. I would like to add seasonal dummies to the equation (go to question set 16).
   4. I would like to drop LYDUSP from the equation (go to question set 20).
   5. I would like to drop PROPK from the equation (go to question set 13).