THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 164

Essay

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
An economist is in the process of developing a model to predict the price of gold.She believes that the two most important variables are the price of a barrel of oil (x₁)and the interest rate (x₂).She proposes the model y = β₀ + β₁x₁ + β₂x₂ + β₃x₁x₃ + ε.A random sample of 20 daily observations was taken.The computer output is shown below.
THE REGRESSION EQUATION IS
y = 115.6 + 22.3x₁ + 14.7x₂ - 1.36x₁x₂

S = 20.9 R-Sq = 55.4%
ANALYSIS OF VARIANCE

-Do these results allow us,at the 5% significance level,to conclude that the model is useful in predicting the price of gold?

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Definitions:

Equilibrium

A situation in a market where demand equals supply, and there is no tendency for the quantities supplied and demanded to change.

Market

The institution through which buyers and sellers interact and engage in exchange.

S And D

Stands for Supply and Demand, which are the forces that determine the price of goods and services in a marketplace.

CD-Rom Drives

Hardware devices used for reading data stored on CD-ROMs, typically used for distributing software and storing media in the past.