ECON 1P91 Lecture : #1 Sept. 8.pdf
Get access
Related Documents
Related Questions
Given the Correlation Matrix below what two major problems can you foresee from the effort to forecast Sales using Price and Advertising as independent variables in multiple regression? Correlation Matrix
Variables Sales Price Advertising Sales 1.00 .00 Price -.87 1.00 .01 ..00 Advertising .45 -.79 1.00 .04 .02 .00 Income .36 .25 .21 .07 .04 .09 (Points : 3) |
A. Sales and Income do not have a significant relationship at the 95% confidence level.
B. Price and Advertising may be collinear (Multicollnearity)
C. Price and Sales do not have a significant linear relationship at the 95% confidence level.
D. Both 1 and 2 above.
E. None of the above.
Consider a simple economy that only produces two goods; apples and oranges. The following table shows prices and quantities over a 3 year period.
Price of |
Quantity of |
Price of |
Quantity of |
|
YEAR |
Apples |
Apples |
Oranges |
Oranges |
2012 |
2 |
20 |
1 |
10 |
2013 |
3 |
24 |
2 |
12 |
2014 |
4 |
30 |
3 |
20 |
Use the information from the previous table to fill out the following table:
Real GDP |
GDP |
||
YEAR |
Nominal GDP ($) |
(The base year 2012)($) |
Deflator |
2012 |
|||
2013 |
|||
2014 |
Choose one from each:
From 2013 to 2014, nominal GDP (increased or decreased) and real GDP (increased or decreased).
The inflation rate in 2014 was (10%, 40.6%, 29.4%, -28.9%, or -9.1%).
Why is real GDP a more accurate measure of an economyâs production than nominal GDP?