Question

Referring to Table 13-3, one economy in the sample had an aggregate consumption level of $3 billion, a GDP of $3.5 billion, and an aggregate price level of 125. What is the residual for this data point?

SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.991 0.982 0.976 0.299 10 ANOVA MS 6.7082 186.325 0.0897 Signif P 0.0001 df Regression Residual Total 33.4163 0.6277 34.0440 Intercept GDP Price Coeff 0.0861 0.7654 0.0006 StdErr tStat 0.5674 0.0574 0.0028 0.152 13.340 0.219 P-value 0.8837 0.0001 0.8330

Answer 1

regression equation: y = 0.7654*x1 - 0.0006*x2 - 0.0861

for x1 = 3.5, x2 = 125
y = 0.7654*3.5 - 0.0006*125 - 0.0861
y = 2.5178

observed value = 3
predicted value = 2.5178

Hence residual = 3 - 2.5178 = 0.4822