SCENARIO 14-3
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.
-Referring to Scenario 14-3, one economy in the sample had an aggregate consumption level of $4 billion, a GDP of $6 billion, and an aggregate price level of 200. What is the residual for this data
Point?
A) $4.39 billion
B) $0.39 billion
C) - $0.39 billion
D) - $1.33 billion

Question

SCENARIO 14-3
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. 
-Referring to Scenario 14-3, one economy in the sample had an aggregate consumption level of $4 billion, a GDP of $6 billion, and an aggregate price level of 200. What is the residual for this data
Point?
A) $4.39 billion 
B) $0.39 billion 
C) - $0.39 billion 
D) - $1.33 billion

Quizplus · Accepted Answer

The residual is calculated as the difference between the actual consumption and the predicted consumption. If the predicted consumption is $4.39 billion and the actual consumption is $4 billion, the residual is $4 billion - $4.39 billion = -$0.39 billion.

SCENARIO 14-3 an Economist Is Interested to See How Consumption for an for an Economy