You Recall from One of Your Earlier Lectures in Macroeconomics

question 47

Essay

You recall from one of your earlier lectures in macroeconomics that the per capita
income depends on the savings rate of the country: those who save more end up
with a higher standard of living.To test this theory, you collect data from the
Penn World Tables on GDP per worker relative to the United States (RelProd)in
1990 and the average investment share of GDP from 1980-1990 (sK ),
remembering that investment equals saving.The regression results in the
following output: $$\begin{array} { l } \widehat { \text { RelProd } } = 0.08 + 2.44 \times s _ { K } , R ^ { 2 } = 0.46 , S E R = 0.21 \\\quad\quad\quad\quad\quad( 0.04 ) ( 0.38 ) \\\end{array}$$ (a)Interpret the regression results carefully.

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Definitions:

English Auction

A method of sale involving ascending bids, where the item is sold to the highest bidder.

Expected Revenue

The anticipated total income of a business from the sale of goods or services, based on probable outcomes.

Rationally

In the context of economics, making decisions based on maximizing utility and weighing benefits against costs logically.

Production Function

A mathematical model that describes the maximum output that can be achieved with a given set of inputs, reflecting the technological relationship between inputs and outputs.