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    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)

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    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

    Regression Statistics
    Multiple R 0.991
    R Square 0.982
    Adjusted R Square 0.976
    Standard error 0.299
    Observations 10

    ANOVA
    df SS MS F SignifF
    Regression 2 33.4163 16.7082 186.325 0.0001
    Residual 7 0.6277 0.0897
    Total 9 34.0440

    Coeff StdError t Stat P-Value
    Intercept -0.0861 0.5674 -0.152 0.8837
    GDP 0.7654 0.0574 13.340 0.0001
    Price -0.0006 0.0028 -0.219 0.8330

    Referring to the table, when the economist used a simple linear regression model with consumption as the dependent variable and GDP as the independent variable, he obtained an r2 value of 0.971. What additional percentage of the total variation of consumption has been explained by including aggregate prices in the multiple regression?

    A. 98.2
    B. 11.1
    C. 2.8
    D. 1.1

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    The correct answer is D. The simple linear regression had explained 97.1% of the total variation in consumption (as ...

    $2.19

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