Gross domestic product. The gross domestic product

(GDP) is an important measure of the overall economic strength of a country. GDP per capita makes comparisons between different size countries more meaningful. A researcher looking at GDP, fit the following model based on an educational variable, Primary School Completion Rate

(%), and finds:

Dependent variable is: GDP per Capita R squared = 3.44%
s = 15945.46 with 96 - 1 = 95 df Term Estimate Std Error t-Ratio P-value Intercept 1935.5693 5987.938 0.320 0.7472 Primary Completion Rate 122.3288 66.8131 1.830 0.0703

a) Explain to the researcher why, on the basis of the regression summary, she might want to consider other predictor variables in the model.

b) Explain why you are not surprised that the sign of the slope is positive.
The researcher adds two variables to the regression and finds:
Dependent variable is: GDP per Capita R squared = 80.00%
s = 7327.65 with 96 - 4 = 92 df Term Estimate SE(Coeff) t-ratio P-value Intercept 2775.98251 2803.32606 0.99 0.3247 Cell phones/
100 people 92.84968 37.38697 2.48 0.0148 Internet users per 100 people (2004)
480.49061 54.04020 8.89 60.0001 Primary completion rate -63.28454 32.25614 -1.96 0.0528

c) Explain how the slope of Primary Completion Rate can now be negative.