TABLE 14-3
an Economist Is Interested to See How Consumption $\text {SUMMARY OUTPUT}$

TABLE 14-3
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.
$\text {SUMMARY OUTPUT}$

$\begin{array}{lc}\hline \text { Regression Statistics } \\\hline \text {Multiple R} & 0.991 \\ \text {R Square }& 0.982 \\ \text {Adjusted R Square }& 0.976 \\ \text {Standard Error }& 0.299 \\ \text {Observations }& 10 \\\hline\end{array}$

ANOVA
$\begin{array}{lrrrrr}\hline & \text { d f}& \text { SS } & \text {MS } & \text { F } & \text {Significance F } \\\hline \text { Regression} & 2 & 33.4163 & 16.7082 & 186.325 & 0.0001 \\ \text {Residual }& 7 & 0.6277 & 0.0897 & & \\ \text {Total} & 9 & 34.0440 & & & \\\hline\end{array}$


$\begin{array}{lcccr}\hline & \text {Coefficients} & \text { Standard Error} & \text { t Stat }& \text { p -value} \\\hline \text {Intercept }& -0.0861 & 0.5674 & -0.152 & 0.8837 \\ \text {GDP} & 0.7654 & 0.0574 & 13.340 & 0.0001 \\ \text {Price }& -0.0006 & 0.0028 & -0.219 & 0.8330 \\\hline\end{array}$

-Referring to Table 14-3, what is the estimated average consumption level for an economy with GDP equal to $2 billion and an aggregate price index of 90?

A) $9.45 billion
B) $1.39 billion
C) $2.89 billion
D) $4.75 billion

Correct Answer:

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