# Question

Based on data from 63 counties, the following model was estimated by least squares:

where

y` = growth rate in real gross domestic product

x1 = real income per capita

x2 = average tax rate, as a proportion of gross national product

The numbers in parentheses under the coefficients are the estimated coefficient standard errors.

a. Test against a two-sided alternative the null hypothesis that β1 is 0. Interpret your result.

b. Test against a two-sided alternative the null hypothesis that β2 is 0. Interpret your result.

c. Interpret the coefficient of determination.

d. Find and interpret the coefficient of multiple correlation.

where

y` = growth rate in real gross domestic product

x1 = real income per capita

x2 = average tax rate, as a proportion of gross national product

The numbers in parentheses under the coefficients are the estimated coefficient standard errors.

a. Test against a two-sided alternative the null hypothesis that β1 is 0. Interpret your result.

b. Test against a two-sided alternative the null hypothesis that β2 is 0. Interpret your result.

c. Interpret the coefficient of determination.

d. Find and interpret the coefficient of multiple correlation.

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