The Following Table Shows Real GDP and Potential Real GDP

question 9

Multiple Choice

The following table shows real GDP and potential real GDP for the years 2000-2012. Refer to this table when answering
Table 10.1 ($ billions)
(Source: Federal Reserve Economic Data, St. Louis Federal Reserve)
$$\begin{array} { c c c } \hline & \begin{array} { c } \text { Potential } \\\text { GDP }\end{array} & \text { Real GDP } \\\hline 2000 & 10,909.7 & 11,216.4 \\2001 & 11,304.5 & 11,337.5 \\2002 & 11,674.3 & 11,543.1 \\2003 & 12,003.6 & 11,836.4 \\2004 & 12,290.0 & 12,246.9 \\2005 & 12,569.2 & 12,623.0 \\2006 & 12,864.6 & 12,958.5 \\2007 & 13,177.7 & 13,206.4 \\2008 & 13,485.0 & 13,161.9 \\2009 & 13,745.4 & 12,758.0 \\2010 & 13,950.3 & 13,063.0 \\2011 & 14,166.6 & 13,299.1 \\2012 & 14,411.0 & 13,593.2 \\\hline\end{array}$$
-According to the data in Table 10.1, when was the recession deepest?

• A) 2001
• B) 2003
• C) 2009
• D) 2008
• E) Not enough information is given.

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Definitions:

Quantitative Predictor Variables

Variables that can be quantified and measured and are used to predict outcomes in statistical analyses.

Indicator Variables

Variables used in statistical models that take the value of 1 if a certain condition is met and 0 otherwise, often used to represent categorical data.

Regression Model

A statistical model used to estimate the relationship between a dependent variable and one or more independent variables.

Stepwise Regression

A method of regression analysis in which the choice of predictive variables is carried out by an automatic procedure.