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[For the next two questions] Suppose you conjecture that sales growth in the auto industry depends on GDP growth. To verify this conjecture, you run
[For the next two questions] Suppose you conjecture that sales growth in the auto industry depends on GDP growth. To verify this conjecture, you run a regression of real sales growth versus real GDP growth using data from 1990-2004 (real sales are computed with 2004 as the base year), and get the following output from Excel: Regression Statistica Multiple R R. Square Adjusted R Square 0.49516037 0.040905183 Standard Error Observations ANOVA Regression Residual Total Intercept X Variable 1 0.807511717 0.70317283 14 DY 1 13 14 Significance F 0.009911986 0.009944986 1.009175789 01045812996 0.009915725 0.002480556 S'S 0.019867211 MS Coefficients Standard Error St 0.0308261117 0.075108657 2.104202227 0.044802093 0.5267010334 0.276018646 2.882292633 0.005812996 P-wue Assume that auto industry sales in 2003 and 2004 were $135 billion and $150 billion. The forecasted real GDP growth rate and inflation rate in 2005 are 2% and 4%, respectively. Q5. What is the projected growth rate in real sales in the auto industry in 2005? Choose the closest answer.
Q6. If answer for Q 5 was 4.2, what are the projections of auto industry real and nominal sales in 2005?
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