### Modeling Corruption Based on Regime Type and GDPWe are analyzing the effects of regime type on corruption with the following model:\[ \hat{\text{Corruption}} = 10 - 0.1 \text{GDPpc} - 2.0 \text{Democracy} \]where **Corruption** is an index of corruption, **GDP (per capita)** is measured in thousands of dollars, and **Democracy** is a dummy variable that is equal to one if a country is a democracy and 0 otherwise. **Question:** What is the predicted corruption index of a democratic country with a per capita GDP of $49,000?**Instructions:** Enter your answer with one decimal place in the provided box.**Solution:**1. Substitute the given values into the model: - GDP per capita (GDPpc) = $49,000 (which is 49 in thousands of dollars) - Democracy = 1 (since the country is a democracy) 2. Calculate the predicted corruption index:\[ \hat{\text{Corruption}} = 10 - 0.1 \times 49 - 2.0 \times 1\]\[ \hat{\text{Corruption}} = 10 - 4.9 - 2\]\[ \hat{\text{Corruption}} = 3.1\]Therefore, the predicted corruption index of a democratic country with a per capita GDP of $49,000 is **3.1**.Enter your answer with one decimal place in the box provided.![Answer Box](https://example.com/answer-box-placeholder)This model helps in understanding how different factors like GDP per capita and regime type (democracy) might influence the perceived level of corruption in a country.

A dummy variable is a variable that distinguishes different groups in the sample.

We are analyzing the effects of regime type on corruption with the following model: Corruption = 10 – 0.1GDPpc - 2.0Democracy where Corruption is an index of corruption, GDP (per capita) is measured in thousands of dollars, and Democracy is a dummy variable that is equal to one if a country is a democracy and 0 otherwise. What is the predicted corruption index of a democratic country with a per capita GDP of $49,000? Enter your answer with one decimal place.

We are analyzing the effects of regime type on corruption with the following model: Corruption = 10 – 0.1GDPpc - 2.0Democracy where Corruption is an index of corruption, GDP (per capita) is measured in thousands of dollars, and Democracy is a dummy variable that is equal to one if a country is a democracy and 0 otherwise. What is the predicted corruption index of a democratic country with a per capita GDP of $49,000? Enter your answer with one decimal place.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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