This essay focuses on the factors that make marriages successful. One such factor is the presence of an extramarital affair.  In the data file affairs.wf1  you have 601 observations (obtained from a confidential survey conducted by a US magazine) on this phenomenon.[1] The variables are defined as follows:

the factors that make marriages successful

Social scientists are often interested in the factors that make marriages successful, versus those that predict familial break up. One such factor is the presence of an extramarital affair.  In the data file affairs.wf1  you have 601 observations (obtained from a confidential survey conducted by a US magazine) on this phenomenon.[1] The variables are defined as follows:
Naffairs – the number of affairs in a given year
Age – the age of a respondent
Yrsmarr – number of years the respondent has been married

Kids – the number of children in the family
Relig – a self-assessed measure of religiosity (5 indicates highly religious)
Educ – years of education
Ratemarr – a self-assessed measure of marital satisfaction (5 indicates highly satisfied)

Your task is to produce an econometric model that will yield useful information for understanding the incidence of extramarital affairs.

Be sure to highlight the strengths and weaknesses of your model. Also include an Eviews output of your final model and of other related outputs that helped you make your decisions.
You may like to (i) use alternative functional forms and (ii) include different transformations of the same variable in your chosen regression.  You should also consider at least some of the following:

(1) The quality of the fit
(2) The significance of the coefficients
(3) Whether the specification of your model is appropriate for the data
(4) The parsimony of your model (i.e. there is a slight preference for simple models over complex ones)
(5) Whether the standard errors are correct
(6) The extent to which multicollinearity affects your model
(7) The social implications of your research.
Note that there is no ‘correct’ answer and that a great many specifications will perform well.

You will be marked on both the model and the explanation you provide with an emphasis on the explanation.

Question 5
Due:                                                    2020/10/25
Workload:                              see details below
Course Code:                                     ECON2420
Course Name:                                    The Macroeconomy & Business Conditions
Assessment:                            Assignment Two: Using the Right Model Well

Task description
Firstly, All topics and associated learning materials are assessable.
Secndly, Rely on the course’s study materials.
Thirdly, Comply with word limits.
Do not repeat the question in your answer.
Refer also to General Instructions for Assignment 2 below.

General instructions

The tutorials also contain assessable material. If you have fallen behind, allocate time for catching up.Relying on googling an answer, or getting answers from a textbook or from some other course, may result in disaster.
The Assignment tests your understanding and your ability to apply macroeconomic reasoning in its valid context.  It is not a mere copy-and-paste exercise.
(e.g. Arial, Calibri, Times New Roman…) and in a standard size (preferably 11 or 12).
The word limits are reasonable, probably an over-estimate. If you exceed them, you have probably misunderstood the task and/or have included irrelevant material.

The document is designed for you to insert your answer into the space indicated.

However, last-minute breakdowns in technology are possible, so you are permitted to upload a separate document, if questions are answered in the right sequence and it is completely clear which question and which part of the question your answer relates to.  Of course, the world limits still apply.
Answer directly and clearly. here is nothing to gain by padding or irrelevance; you can only lose.

Do not waste space and words by defining basic terms; simply use them correctly.
Edit your answers both to avoid padding and to meet the word limits.
Acceptable are M or MS for money supply, r for real interest rate, pi or π for the (%) rate of inflation, P for the price level of currently produced goods and services, Y and Y*, V for velocity of money, MP and FP, RBA, ESA (exchange settlement accounts), etc.

Put things into words instead. (E.g., ‘The AD line shifts to the left resulting in a short-term slump and a long-run decline in inflation.’)  If you really want to include a diagram, it is possible that you have misunderstood the question.  However, if you believe you need to draw one, simply insert a photograph or screen capture into document that you upload.

Answer all questions.
Type your answers for each item into this document where indicated.

Upload this document via Blackboard (the course website).

For Sets One, Two and Seven, indicate whether each of these statements is true T, false F, or ‘it depends’ #.  E.g. highlight your selection:   T    F    #. Or T    F    #.
Explain why each is true or false, or in what significant circumstances it is true and/or in which significant circumstances it is false.

Set One [6 marks]