TABLE 14-3
an Economist Is Interested to See How Consumption $\text {SUMMARY OUTPUT}$

question 214

Multiple Choice

TABLE 14-3
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 this regression is partially reproduced below.
$\text {SUMMARY OUTPUT}$

$\begin{array}{lc}\hline \text { Regression Statistics } \\\hline \text {Multiple R} & 0.991 \\ \text {R Square }& 0.982 \\ \text {Adjusted R Square }& 0.976 \\ \text {Standard Error }& 0.299 \\ \text {Observations }& 10 \\\hline\end{array}$

ANOVA
$\begin{array}{lrrrrr}\hline & \text { d f}& \text { SS } & \text {MS } & \text { F } & \text {Significance F } \\\hline \text { Regression} & 2 & 33.4163 & 16.7082 & 186.325 & 0.0001 \\ \text {Residual }& 7 & 0.6277 & 0.0897 & & \\ \text {Total} & 9 & 34.0440 & & & \\\hline\end{array}$


$\begin{array}{lcccr}\hline & \text {Coefficients} & \text { Standard Error} & \text { t Stat }& \text { p -value} \\\hline \text {Intercept }& -0.0861 & 0.5674 & -0.152 & 0.8837 \\ \text {GDP} & 0.7654 & 0.0574 & 13.340 & 0.0001 \\ \text {Price }& -0.0006 & 0.0028 & -0.219 & 0.8330 \\\hline\end{array}$

-Referring to Table 14-3, what is the p-value for the regression model as a whole?

• A) 0.01
• B) 0.05
• C) 0.001
• D) none of the above

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Definitions:

British Pounds

The currency of the United Kingdom, which is one of the world's major currencies used for international trade and investment.

Forward Contract

A tailored agreement between two entities to purchase or sell a specific asset at a predetermined price on a future date.

Cash Flow Hedge

A financial strategy used to reduce the risk associated with fluctuations in cash flow due to changes in exchange rates, interest rates, or commodity prices.

Japanese Yen

The official currency of Japan, symbolized as ¥ and known for being one of the most traded currencies in the global foreign exchange market.