QUESTION 8 Consider the following results of a multiple regression model of doll

Question

QUESTION 8

Consider the following results of a multiple regression model of dollar price of unleaded gas (dependent variable) and a set of independent variables: price of crude oil, value of S&P500, price U.S. Dollars against Euros, personal disposal income (in million of dollars) :

R-Square = 97%

What is the interpretation of coefficient for crude oil?

Every 1% increase in crude price will cause unleaded gas price to decrease by 6.51 cents.

Every $1 increase in crude price will cause unleaded gas price to increase by 6.51%.

Every 1% increase in crude price will cause unleaded gas price to increase by 6.51 cents.

Every $1 increase in crude price will cause unleaded gas price to increase by 6.51 cents.

Coefficient t-statistics Intercept 0.5871 68.90 Crude Oil 0.0651 32.89 S&P 500 -0.0020 18.09 Price of $ -0.0415 14.20 PDI 0.0001 17.32

Explanation / Answer

Interpretation of coefficient for crude oil is

For every $1 increase in crude oil price will cause unleaded gas price to increase by 6.51 cents.

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