ECON 302 - Colgate University
ECON 302
QUIZ # 3
1. An executive at a Wall Street securities firm wants to determine the relationship between the U.S. national output (in billions of dollars) and the profits (in millions of after-tax dollars) of the General Electric corporation. She suspects that national income will influence GE’s profits. Her research provides her with data for 12 years concerning each variable. The data can be found in the ECON302m library in the filename GeneralElectric.
a. Using SAS, what is the regression equation that you estimate?
b. What is the standard error of the estimate?
c. On average, what effect does a $1 increase in national output seem to have on the profits of General Electric? Calculate a 90 percent confidence interval for the size of this effect.
d. If the Wall Street executive feels that next year’s national output will be $2 trillion, what forecast of General Electric’s profits will she make on the basis of the regression? Calculate a 95% confidence interval for this forecast.
e. Does the forecast you made in part (d) involve extrapolation? If so, is this hazardous?
f. What is the R2 of this regression? Explain what R2 means.
g. Test the hypothesis that the coefficient on national output is equal to zero, using all steps necessary to perform a hypothesis test.
h. Do the results obtained in previous parts of this problem prove that differences in GE’s profits are caused by changes in U.S. national output? Explain.
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.