A Student Used Multiple Regression Analysis to Study How Family

question 62

Essay

A student used multiple regression analysis to study how family spending (y) is influenced by income (x₁), family size (x₂), and additions to savings (x₃). The variables y, x₁, and x₃ are measured in thousands of dollars. The following results were obtained. Coefficient of determination = 0.946
a.Write out the estimated regression equation for the relationship between the variables.
b.What can you say about the strength of this relationship?
c.Carry out a test of whether y is significantly related to the independent variables. Use a .05 level of significance.
d.Carry out a test to see if x₃ and y are significantly related. Use a .05 level of significance.
e.Why would a coefficient of determination very close to 1.0 be expected here?

Recognize how changes in a country's trade surplus affect its net capital outflow.

Understand the possibility and implications of a country having domestic investment exceed national saving.

Calculate and interpret the real exchange rate between currencies.

Learn the significance of net exports and net capital outflow on a country's economy.

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Definitions:

Hedonic Theory

A psychological theory suggesting that individuals are motivated by the pursuit of pleasure and the avoidance of pain.

Preference Test

A preference test is a method used to assess individuals' choices or affinities among different options, typically to understand their likes, dislikes, or behavioral tendencies.

Sign

An object, quality, or event whose presence or occurrence indicates the possible presence of something else, often used in communication.

Hedonism

A philosophical theory or approach that suggests the pursuit of pleasure and intrinsic goods are the primary or most important goals of human life.