Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. consider the following two regressions based on th

Consider the following two regressions based on the US data for 1946 to 1975 (standard...

90.2K

Verified Solution

Question

Accounting

Consider the following two regressions based on the US data for 1946 to 1975 (standard errors are in parentheses) Ct = 26.19 + 0.6248GNPt - 0.4398Dt Se = (2.73) (0.0068) (0.0736) R^2=0.999 (C/GNP) = 25.92 1/GNPt + 0.6246 - 0.4315 D/GNPt Se = (2.22) (0.0068) (0.0597) R^2 = 0.875 Where C = aggregate private consumption expenditure GNP = gross national product D = national defense expenditure t = time The objective of the study was to find out the effect of defense expenditure on other expenditures in the economy. a. What might be the reason(s) for transforming the first equation into the second equation? b. Based on the objective of the transformation, what assumption has been made about the error variance? c. If there was a problem, have the authors succeeded in removing it? How can you tell? d. Does the transform regression have to be run through the origin? Why or why not? e. Can you compare the R^2 values of the two regressions? Why or why not?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Statistics
1.2K views

Consider the following set of data. (18, 15), (31, 55), (63, 27), (82, 24), (109, 58),...

Biology
1.2K views

24. List examples of selfish behavior, cooperative behavior, altruistic behavior, and spiteful behavior.

Biology
1.2K views

ng Time 58 minutes 03 secon n Completion Status ESTION 9 ts which organelles are...

Basic Math
1.2K views

A 35 year old married woman who drives a sedan and has never been in...

Basic Math
1.2K views

A survey of a random sample of 1280 student loan borrowers found that 218 had...

Basic Math
1.2K views

Select all of the valid conditions for proving similarity.Angle-AngleAngle-Side-AngleSide-Side-SideAngle-Side-SideSide-Angle-Side

Basic Math
1.2K views

Find the height of the triangle with an area of 231cm and a base of...

Algebra
1.2K views

Find the center foci and vertices of the ellipse Graph the equation x 2 y...

Accounting
1.2K views

Una fotocopiadora cuesta X y tendr un valor de recuperacin de Y despus de n...

Accounting
1.2K views

Sale of Equipment Equipment was acquired at the beginning...

Accounting
1.2K views

The Elberta Fruit Farm of Ontario has always hired transient workers to pick its annual...

Accounting
1.2K views

Shown below is an extract from the comparative statements of financial position and statement of...