Mastering Binary Variables in Excel: A Guide to Econ 308 Assignment 02

Assignment 02 Summer 22 – ECON 308Due 7/27 In the Sakai lesson “Pre-Course Excel_Stats” there are several sub-lessons. Of particular interest for this assignment is the sub lesson “Week 00 Part 7 Binary Variables” There are 4 answers required and only 4 answers accepted. You must do: Either Question 1 or 4 or 2; And either question 5 or 3 or 6; And Question 9 or 7; And Question 8 Each numbered question is weighted the same, but the parts of each numbered questions have various weights. The weights are shown below. Total Points Earned 0   points avail. points earned   points avail. points earned   points avail. points earned Question 1 25 0 Question 4 25 0 Question 2 25 0 1a 3 0 4a 4 0 2a 2 0 1b 3 0 4b 4 0 2b 2 0 1c 8 0 4c 8 0 2c 7 0 1d 4 0 4d 4 0 2d 4 0 1e 7 0 4e 5 0 2e 10 0   points avail. points earned             Question 8 25 0             8a 10 0             8b 15 0               points avail. points earned   points avail. points earned       Question 9 25 0 Question 7 25 0       9a 2 0 7a 4 0       9b 2 0 7b 3 0       9c 10 0 7c 4 0       9d 10 0 7d 14 0       9e 1 0               points avail. points earned   points avail. points earned   points avail. points earned Question 5 25 0 Question 3 25 0 Question 6 25 0 5a 4 0 3a 15 0 6ai 2 0 5b 3 0 3b 10 0 6aii 3 0 5c 4 0       6b 2 0 5d 14 0       6c 2 0             6d 7 0             6e 9 0 Each numbered question is unique in some ways. Here is a narrated guide of each numbered question This is pretty much a general nature question which relies on the idea of adverse selection in a lending process. This question is about the actual inflation rate, the real rate (defined in ex post), and the 1 year rate on government bonds. Yes this is a Fisher Equation question at hear. After identifying such rates you are asked about some impacts and policy. Question d relates to policy. Question e is something that is very practical. Question 3 is somewhat about the Fisher equation, but more directly associated with the aggregate supply and demand model. This question is about risk premiums on bond yields. There are some easy calculations to do and some implications of that idea. Question 5 is about the aggregate supply and demand model. Recent publications about how Economists handled the forecasting and analysis during the Covid Pandemic raised questions. There were many statements that “Economics is dead.” Well it isn’t. However, one problem for the current state of the world is the idea of “potential GDP”. This plays a big role in the aggregate supply and demand model. Here I am asking you if the numbers for potential GDP are reasonable as published. Some would say yes and some would say no. The issue is how we define potential GDP. Perhaps the economic development while Covid was here casts a shadow on things? Question 6 is again about the Fisher Equation. It is a good concept that can’t be ignored. Question 7 is really about the deposit/expansion or money/expansion chapter. We have an idea of the multiplier from that chapter, it is a big idea. However, it may have changed over time. Holistically this question seeks evidence of one of the reasons for that change. Excess reserves are a huge factor today. Another one is the public desire to hold cash which has vacillated in recent years. A banking balance sheet. Oh my. We begin in a world of the money or deposit expansion process (Chapter 17). The story is easy enough to follow there, reserves increase, the bank’s loans and deposits increase as well. There is a problem though. That idea, as explained, needs to be fleshed out because there is also a likely binding capital requirement. This is a big deal in banking today. This is a pretty straight forward and clear estimation regarding material in chapter 18. As complex as you wish to make it, but as easy as simple demand and supply. Here is a hint: “If I increase the supply of lemons the price of lemons falls.” Here is another hint: “If I decrease the supply of lemons, the price of lemons rises.” You are asked if the “FED” is doing what it says it was going to do. Interesting. For this question we consider a brief look at the lending process. In particular, we are put into the position of being a lending officer at a financial institution. You are provided hypothetical data. This is not real data but it is derived from real-world data. We are not going to forecast or explore a “yes/no” decision on loans – I wish we could but the statistical tool for that is hard to do and beyond a BS in business level. However, we are going to do something that takes us far along that trail. We are considering that Late Payments over the prior two years are a valid measure of credit-worthiness and that is what we explore. So our emphasis is on determining or explaining the number of late payments an individual has over the prior two years, and what drives, or impacts that number. Answer the following The average number of late payments for the sample is ______ The aver