## (Solved) An economist is interested to see how consumption for an economy (in \$ billions) is influenced by gross domestic product (\$ billions) and aggregate...

An economist is interested to see how consumption for an economy (in \$ billions) is influenced by gross domestic product (\$ billions) and aggregate price (consumer price index). The Microsoft Excel output of this regression is partially reproduced below.

SUMMARY OUTPUT

Â Regression Statistics

Multiple R 0.991

R Square 0.982

Adjusted R Square 0.976

Standard Error 0.299

Observations 10

ANOVA

Â Â Â Â Â Â Â Â Â Â Â Â Â Â dfÂ Â Â Â Â Â Â SSÂ Â Â Â Â Â Â Â Â Â MSÂ Â Â Â Â Â Â Â FÂ Â Â Â Â Â Â Â Â Â SignifÂ F

RegressionÂ Â Â Â 2Â Â Â 33.4163Â Â Â Â Â Â Â Â 16.7082Â Â Â 186.325Â Â Â Â Â Â 0.0001

ResidualÂ Â Â Â Â Â 7Â Â Â Â 0.6277Â Â Â Â Â Â Â Â Â 0.0897

TotalÂ Â Â Â Â Â Â Â Â 9Â Â Â 34.0440

Â Â Â Â Â Â Â Â Â Â Â Â Â Â CoeffÂ Â Â Â Â Â Â Â Â StdErrorÂ Â Â Â Â Â Â Â Â Â t StatÂ Â Â Â Â Â Â Â Â p-value

InterceptÂ Â Â Â Â -0.0861Â Â Â Â Â Â Â 0.5674Â Â Â Â Â Â Â Â Â Â -0.152Â Â Â Â Â Â Â 0.8837

GDPÂ Â Â Â Â Â Â Â Â 0.7654Â Â Â Â Â Â Â Â 0.0574Â Â Â Â Â Â Â Â Â 13.340Â Â Â Â Â Â Â 0.0001

PriceÂ Â Â Â Â Â Â Â Â -0.0006Â Â Â Â Â Â Â Â 0.0028Â Â Â Â Â Â Â Â Â -0.219Â Â Â Â Â Â Â Â 0.8330

Referring to Scenario 14-3, when the economist used a simple linear regression model with consumption as the dependent variable and GDP as the independent variable, he obtained anÂ r2Â value of 0.971. What additional percentage of the total variation of consumption has been explained by including aggregate prices in the multiple regression?

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This question was answered on: Sep 05, 2019

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