The accompanying scatterplot shows the growth rate (in % of Gross Domestic Produ

Question

The accompanying scatterplot shows the growth rate (in % of Gross Domestic Product) of 27 countries from a certain region vs. the growth rate of the leading country in another region. Each point represents one of the years from 1971 to 2012. The output of a regression analysis follows the scatterplot.

1) Check the assumptions and conditions for the linear model. What assumptions and conditions are met?

A. All of the assumptions and conditions are met with the exception of the condition that there are no outliers (there is one outlier in the scatterplot).

B. All of the assumptions and conditions are met with the exception of the Quantitative Variables Condition; the data are categorical.

C. All of the assumptions and conditions are met with the exception of the Linearity Condition; the points do not follow a straight line pattern (as evidenced by the

Upper R squaredR2-value).

D. All of the assumptions and conditions are met. The variables are quantitative (with units % of GDP), the plot is reasonably straight, there are no outliers, and the spread is roughly constant (although the spread is large).

2) Explain the meaning of R^2 in this context.

Select the correct choice below and fill in the answer box to complete your choice.

A. About ____% of the variation in the growth rate of the leading country is caused by the growth rates of the countries in the region.

B. About ____% of the growth rates of the countries in the region are accounted for by the growth rate of the leading country.

C. About ____% of the variation in the growth rates of the countries in the region is accounted for by the growth rate of the leading country.

D. About ____% of the variation in the growth rates of the countries in the region is caused by the growth rate of the leading country.

Explanation / Answer

1)

For this question scatter plot is needed as mentioned in the problem.

2)

The R-square is 45.13%.

It shows that 45.13% variation is dependent variable is explained by independent variable.

Independent variable: Leading Countries GDP growth

Dependent variable:  growth rates of the countries in the region

Correct option:

C. About 45.13% of the variation in the growth rates of the countries in the region is accounted for by the growth rate of the leading country.

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