17) Referring to Table 14-3, what is the estimated mean consumption level for an
ID: 3361536 • Letter: 1
Question
17) Referring to Table 14-3, what is the estimated mean consumption level for an economy with GDP 17) equal to $4 billion and an aggregate price index of 150?
A) $1.39 billion B) $2.89 billion C) $4.75 billion D) $9.45 billion
18) Referring to Table 14-3, one economy in the sample had an aggregate consumption level of $4 18) billion, a GDP of $6 billion, and an aggregate price level of 200. What is the residual for this data
point?
A) -$0.39 billion B) $0.39 billion C) -$1.33 billion D) $4.39 billion
20) Referring to Table 14-3, to test whether gross domestic product has a positive impact on consumption, the p-value is
A) 0.9999. B) 0.00005. C) 0.99995. D) 0.0001.
Please provide steps
An economist is interested to see how consumption for an economy (in $billions) is influenced by gross domestic product ($ billions) and aggregate price (consumer price index). The Microsoft Excel output of thisregression is partially reproduced below SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.991 0.982 0.976 0.299 ANOVA SignifF 0.0001 df MS Regression Residual Total 33.4163 0.6277 34.0440 16.7082 186.325 0.0897 Intercept GDP Price Coeff 0.0861 0.7654 0.0006 StdError tStat 0.5674 0.0574 0.0028 0.152 13.340 0.219 P-value 0.8837 0.0001 0.8330Explanation / Answer
The regression equation is:
Consumption = -0.0861 + 0.7654 GDP - 0.0006 Price
Hence,
17. For GDP = 4, Price = 150,
Consumption = -0.0861 + 0.7654(4) - 0.0006(150)
Consumption = $ 2.89 billion
Option B is correct.
18. For GDP = 6, Price = 200,
Consumption = -0.0861 + 0.7654(6) - 0.0006(200)
Consumption = $ 4.39 billion
Hence,
Residual = $4 - $4.39 = -$0.39 billion
Option A is correct.
20. For two tailed test, given p value = 0.0001
Hence,
For positive impact, p - value = 0.0001/2 = 0.00005
Option B is correct.
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