Based on data for the United States for the period 1965 to 2006 (found in Table 3-4 on the textbook's Web site), the following regression results were obtained:
GNPt = - 995.5183 + 8.7503 M1t r2 = 0.9488
se = ( ) (0.3214)
t = (- 3.8258) ( )
where GNP is the gross national product ($, in billions) and M1 is the money supply ($, in billions).
M1 includes currency, demand deposits, traveler's checks, and other checkable deposits.
a. Fill in the blank parentheses.
b. The monetarists maintain that money supply has a significant positive impact on GNP. How would you test this hypothesis?
c. What is the meaning of the negative intercept?
d. Suppose M1 for 2007 is $750 billion. What is the mean forecast value of GNP for that year?