SCENARIO 13-3 an Economist Is Interested to See How Consumption for an for an Economy

question 149

Multiple Choice

SCENARIO 13-3
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.
-Referring to SCENARIO 13-3, when the economist used a simple linear regression model with consumption as the dependent variable and GDP as the independent variable, he obtained an r2 value of 0.971.What additional percentage of the total variation of consumption has been explained by including aggregate prices in the multiple regression?

• A)98.2
• B)11.1
• C)2.8
• D)1.1

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Definitions:

Type I

A statistical error that occurs when a true null hypothesis is incorrectly rejected, also known as a "false positive."

Significance Level

Another term for level of significance, indicating the critical probability level at which the results of a statistical test are deemed significant.

Null Hypothesis

A statement or assumption that there is no significant difference or effect, tested against an alternative hypothesis in statistical analysis.

Null Hypothesis

A hypothesis stating that there is no significant difference between specified populations, any observed difference being due to sampling or experimental error.