If PAE Is Greater Than Y, We Expect

question 21

Multiple Choice

If PAE is greater than Y, we expect:

• A) inventories to increase.
• B) inventories to decrease.
• C) there will be no change in inventories.
• D) the government will spend more than it has collected in taxes.

---

Definitions:

Predicted Values

The values estimated based on a statistical model that represents the expected outcome for a given set of input variables.

Least Squares Line

A straight line that best fits the data points on a scatter plot, minimizing the sum of the squares of the vertical distances of the points from the line.

Coefficient of Determination

A statistical measure, often denoted as \(R^2\), which quantifies the amount of variance of the dependent variable that can be explained by the independent variable(s).

Coefficient of Correlation

A mathematical indicator that evaluates the intensity of the connection between two factors.