The following data give the yearly inflation rate and money supply growth rate (both measured in percentage) for 51 countries. A simple regression of Infla- tion on Growth yields the following information from RegressIt output: (a) What is the linear relationship implied by these data? (b) For a country with an 6% money supply growth, what would be the expected inflation? (This means Growth= 6 as it is measured in percentage.) (c) A simplistic monetarist claims that a 1% increase in the money supply growth rate would result in a corresponding 1% increase in inflation. In other words, for the relationship of Inflation = β0 + β1Growth, the null hypothesis is β1 = 1. Do the regression results support this null hypothesis?
The following data give the yearly inflation rate and money supply growth rate (both measured in percentage) for 51 countries. A simple regression of Infla- tion on Growth yields the following information from RegressIt output: (a) What is the linear relationship implied by these data? (b) For a country with an 6% money supply growth, what would be the expected inflation? (This means Growth= 6 as it is measured in percentage.) (c) A simplistic monetarist claims that a 1% increase in the money supply growth rate would result in a corresponding 1% increase in inflation. In other words, for the relationship of Inflation = β0 + β1Growth, the null hypothesis is β1 = 1. Do the regression results support this null hypothesis?
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter4: Equations Of Linear Functions
Section: Chapter Questions
Problem 6SGR
Related questions
Question
The following data give the yearly inflation rate and money supply growth
rate (both measured in percentage) for 51 countries. A simple regression of Infla-
tion on Growth yields the following information from RegressIt output:
(a) What is the linear relationship implied by these data?
(b) For a country with an 6% money supply growth, what would be the
expected inflation? (This means Growth= 6 as it is measured in percentage.)
(c) A simplistic monetarist claims that a 1% increase in the money supply
growth rate would result in a corresponding 1% increase in inflation. In other
words, for the relationship of Inflation = β0 + β1Growth, the null hypothesis is
β1 = 1. Do the regression results support this null hypothesis?
Transcribed Image Text:Dependent Variable:
Independent Variable:
Regression Statistics
Summary Table
Variable
Coeff.
Intercept -6.554
Growth 1.165
R Square
0.672
Inflation
Growth
Adj.RSqr
0.671
Std.Err.
t Stat.
1.137
-5.764
0.076 15.329
Std.Err.
2.655
P-value
0.000
0.000
# Cases
51
Lower 95%
-8.828
1.013
Upper 95%
-4.280
1.317
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