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:

Base

In mathematics, the number that is raised to a power in exponential expressions or the substance in chemistry that accepts protons or donates electrons.

Common Factors

Numbers or expressions shared as factors by two or more numbers or algebraic expressions.

Factors

Numbers or expressions that divide into another number or expression exactly, without leaving a remainder.

Nearest Hundredth

A method of rounding numbers so that they are accurate to two decimal places.