A Regression of Exports as a Function of Imports in 1991

question 40

Multiple Choice

A regression of exports as a function of imports in 1991 across industry types yielded exports = 68 - 0.3(imports) ,R² = .25,Prob > F = .26,and RMSE = 30.If imports by an industry equal 60,what is the estimate of exports from this industry,and how confident are you of your estimate?

• A) Exports_estimated = 50, variation in imports explains 25% of variation in exports, and the F-test statistic is high, so we are confident in our estimate of exports.
• B) Exports_estimated = 86, variation in imports explains 25% of variation in exports, and the F-test statistic is high, so we are confident in our estimate of exports.
• C) Exports_estimated = 50, variation in exports explains 25% of variation in imports, and the F-test statistic is high, so we are confident in our estimate of exports.
• D) Exports_estimated = 86, variation in exports explains 25% of variation in imports, and the F-test statistic is high, so we are confident in our estimate of exports.
• E) Exports_estimated = 50, but the F-test statistic fails standard significance tests and the RMSE is large relative to estimated exports, so we are not confident in our estimate.

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Definitions:

Production Possibilities

Various combinations of the amounts of different goods that can be produced within a given economy, given technological constraints and available resources.

Isocost Line

A graph line representing all combinations of a firm's inputs that cost the same total amount.

Expenditures

The financial outflows or payments made by an individual, organization, or government unit, usually for goods or services.

Average Product

The output per unit of input, calculated by dividing total output by the quantity of inputs used.