ECON 151: ELEMENTS
OF ECONOMICS I
Lecturer: John Bosco
Dramani (PhD)
COURSE OUTLINE
1. Introducing Economics
2. Supply and Demand
3. Government Intervention in the Market
4. Background to demand
5. Background to Supply
6. Profit Maximising under Perfect
C
PERFORMANCE ASSESSMENT OF MUTUAL
FUNDS IN GHANA: EVIDENCE FROM DATABANK,
GHANA
SUBMITTED BY: ADWOA AMEYAW
INDEX NUMBER: 05KG0514001
SUPERVISOR: MR. SOLOMON SAMANHYIA
1
OUTLINE OF PRESENTATION
Introduction
Problem statement
Research Questions/Objectives
F TEST OF GOODNESS OF FIT
Model
Y = 1 + 2X + u
2
2
2
(
Y
Y
)
(
Y
Y
)
e
TSS ESS RSS
In an earlier sequence it was demonstrated that the sum of the squares of the actual values
of Y (TSS: total sum of squares) could be decomposed into the sum of the squares
ONE-SIDED t TESTS OF HYPOTHESES RELATING TO REGRESSION COEFFICIENTS
True model
Y 1 2 X u
Fitted model
Y b1 b2 X
Null hypothesis
H 0 : 2 20 ,
Alternative hypothesis
H 1 : 2 20
Test statistic
b2 20
t
s.e. b2
Reject H0 if
t t crit
In the previous sequence,
PRECISION OF THE REGRESSION COEFFICIENTS
Simple regression model:
Y = 1 + 2X + u
probability density
function of b2
standard deviation of
density function of b2
2
b2
We have seen that the regression coefficients b1 and b2 are random variables. They provid
PROPERTIES OF THE MULTIPLE REGRESSION COEFFICIENTS
ASSUMPTIONS FOR MODEL A
A.1 The model is linear in parameters and correctly specified.
Y 1 2 X 2 . k X k u
A.2 There does not exist an exact linear relationship among the regressors
in the sample.
A.3 The
TESTING A HYPOTHESIS RELATING TO A REGRESSION COEFFICIENT
Review chapter
Model
X unknown , 2
Estimator
X
Regression model
This sequence describes the testing of a hypotheses relating to regression coefficients. It
is concerned only with procedures, not wi
CONFIDENCE INTERVALS FOR REGRESSION COEFFICIENTS
Model
Y 1 2 X u
Null hypothesis:
H 0 : 2 20
H 1 : 2 20
Alternative hypothesis:
Confidence intervals were treated at length in the Review chapter and their application to
regression analysis presents no prob
A MONTE CARLO EXPERIMENT
True model
Fitted model
Y b1 b2 X
Y 1 2 X u
b2
X X Y Y
a u
X X
i
i
2
2
t
i
i
Xi X
ai
2
X
X
j
In the previous slideshow, we saw that the error term is responsible for the variations of b2
around its fixed component 2. We demon
RANDOM COMPONENTS, UNBIASEDNESS OF THE REGRESSION COEFFICIENTS
True model
Y 1 2 X u
Fitted model
Y b1 b2 X
The regression coefficients are special types of random variable. We will demonstrate this
using the simple regression model in which Y depends on X
GOODNESS OF FIT
Two useful results:
e 0
X e
i i
0
This sequence explains measures of goodness of fit in regression analysis. It is
convenient to start by demonstrating two useful results. The first is that the mean value of
the residuals must be zero.
1
G
1.
Answers to Workshop 13
Which of the following are wholesale and which are retail?
Money and Interest Rates
(a) Large-scale deposits made by firms at negotiated rates of interest. .wholesale
(b) Loans made by high street banks at published rates of inte
1.
Answers to Workshop 16
The following diagrams illustrate two situations in which the slope of the long-run aggregate
supply curve is different from that of the short-run AS curve. In each diagram there is an initial
increase in aggregate demand. In eac
Answers to Workshop 15
The following diagram shows the relationship between national income and the governments
budget balance (BB).
Fiscal and Monetary Policy
Surplus
BB
c
0
Deficit
1.
a
d
Y1
Y2
National income (Y)
b
(a) Define the term budget balance.
G
1.
Answers to Workshop 17
This question looks at the theory of comparative advantage. Imagine a world in which there are
just two countries, F and G, and just two goods, X and Y.
International Trade
Consider the following six situations. Each one shows al
Answers to Workshop 4
1. The following table shows the total utility that Eleanor derives from visits to the cinema per week.
(a)
Background
3
4
5
6 to
7 Demand
8
Visits
1
2
TU ()
12
20
25
28
30
31
31
29
MU()
12
8
5
3
2
1
0
2
Fill in the figures for margi
1.
2.
Answers to Workshop 6
It is usual to divide markets into four categories. In ascending order of competitiveness these are
(fill in the missing three):
1.
Monopoly
2.
Oligopoly
3.
Monopolistic competition
4.
Perfect competition
Perfect Competition
an
Answers to Workshop 2
1.
The following passage refers to the operation of a free-market economy. Delete the words (in
italics) which are incorrect.
Demand and Supply
In a totally free-market economy, the quantities of each type of good that are bought and
Object1
Object2
Object3
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Object15
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Answers to Workshop 11
1.
Given the following possible types of unemployment demand-deficient, real-wage (wage push),
frictional, structural, regional, technological and seasonal which one is likely to worsen in each
of the following cases? (There may be
Answers to Workshop 10
1.
Position each of the following eight terms in the UKs circular flow of income diagram below:
The National Economy
Consumption (of domestically produced goods and services); Net saving; Net taxation;
Government expenditure; Factor
Answers to Workshop 18
1.
Balance of Payments and
Exchange Rates
The following are the various elements of the UK balance of payments account:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
Imports of goods ()
Exports of goods (+)
Imports of serv
1.
Answers to Workshop 5
(a) Complete the following table of costs for a firm. (Note: enter the figures in the MC column
between outputs of 0 and 1, 1 and 2, 2 and 3, etc.)
Background to Supply
Output
TC ()
AC ()
0
55
1
85
85
2
110
55
3
130
43.3
4
160
40
Answers to Workshop 9
1. The following are problems that prevent markets from providing a socially optimal allocation of
resources:
(i)
(ii)
(iii)
(iv)
(v)
Externalities
Monopoly/oligopoly power
Ignorance and uncertainty
Public goods and services
Merit go
1.
Answers to Workshop 7
From the list of points below select those which distinguish a monopolistically competitive industry
from a perfectly competitive industry.
Imperfect Competition
(a) There are no barriers to the entry of new firms into the market.
1.
Answers to Workshop 12
(a) If a household earns 200 a week and spends 150 each week on domestically produced
goods and services, how much does it withdraw from the circular flow?
Short-run Macroeconomic
.50
Equilibrium
(b) What forms will these withdra
Object1
Object2
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1.
Answers to Workshop 8
The assumptions of perfect labour markets are similar to those of perfect goods markets. There are
Wages and the
Everyone is a wage taker
2. Freedom of entry to the labour market
Distribution
of Income
Perfect knowledge of the lab
Answers to Workshop 1
1.
Which of the following are macroeconomic topics/issues and which are microeconomic ones?
Introducing Economics
(a) The level of consumer spending.Macro
(b) Subsidies paid to farmers .Micro
(c) The level of UK exports.Macro
(d) The
1.
Answers to Workshop 3
(a) The price elasticity of demand measures the responsiveness of the quantity demanded to a
change in price.
(b) Give the formula for price elasticity of demand.
Elasticity
See formula in question 4 below.
2.
Back in the mid-1990