Gold Tracker monitors the price of precious metals and has daily data on prices and sales of gold for the past several years. They estimated the following relationship (250 observations):
Q=4,000-0.01P+1.5I-1.25X+2.0S
R^2=.96
Q=daily sale of gold in ounces, P=price of gold per ounce, I= most recent inflation report (in percent), X= index of exchange rate, S is market price of silver per ounce.
Standard errors are 857 for 4,000; 0.002 for 0.01P; 0.65 for 1.5I; 0.44 for 1.25X; 0.48 for 2.0S
A. Evaluate the results of this regression.
B. Recently, the price of gold has been $380 per ounce, inflation 0.2%, dollar trading at 99.7 on index, silver is $4.75 per ounce. What quantity of gold will trade on a daily basis?
C. Are gold and silver substitutes or compliments?