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The Error Sum of Squares Term Is Used as a Criterion

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The error sum of squares term is used as a criterion for determining b0 and b1 because


Definitions:

Crowding Out

The displacement of interest-sensitive private investment that occurs when higher government deficits drive up market interest rates.

Expansionary Gap

An Expansionary Gap exists when an economy’s output exceeds its potential output, often leading to inflationary pressures.

Aggregate Demand

The aggregate need for commodities and services inside an economy at a specific general price level over a particular time frame.

Corporate Income Taxes

Taxes imposed on the net income (profits) of corporations, calculated based on tax rates that vary by jurisdiction.

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