You will run a regression with 2013 per capita GDP and 2013 per capita health care spending. It seems plausible that in countries where people have greater income they also spend more on health care. You will use per capita GDP as the independent or explanatory variable in your regression and health care spending will be the dependent variable.

Warning: I have seen students in the past mix up the dependent and independent variables and this leads to a bunch of wrong answers. Please be careful and remember that the "Y" variable is the dependent variable and that the "X" variable is the independent variable. Use the World Bank data provided to run a regression where 2013 per capita health care expenditure is the dependent variable and 2013 per capita GDP is the independent variable. What is R square? Answer to three decimal places.

Note: R square in the simple regression model from the text is r2

In the per capita GDP versus per capita health care expenditure regression that you just ran you fail to reject the hypothesis that the slope is 0 (i.e. that the per capita GDP has no impact on the amount spent on health care).

(TRUE OR FALSE?)

In the regression that you just ran you reject the hypothesis that the intercept is 0 (as usual assume alpha=.05).

(TRUE OR FALSE?)

Use the results from the regression you just ran with per capita GDP and health care. You already found R square for this regression. What is the estimated variance of the error term (this is the mean-squared error)? Answer to the nearest integer. Hint this number should be less than 1,000,000.

Use the results from the regression you just ran with per capita GDP and health care. You already found R square for this regression. What is the estimated standard deviation of the error term? Answer to the nearest integer.

Use the regression results you have found. What is the test statistic for a test that the slope of the regression line is 0? Answer to two decimal places.

Use the same regression results where you already found R square and other results for this regression. What is the standard error for the estimated slope of the regression line? Answer to four decimal places.

Using the same regression results what is the estimated coefficient on per capita GDP? Answer to three decimal places.

Using the results from the regression you ran, what is the predicted per capita spending on health care for a country with per capita GDP of $20,000? Answer to the nearest integer, do not include a dollar sign, you may round up or down as usual. Hint your answer should be between 100 and 10,000 which is not much of a hint but it tells you if you are way out of the ballpark.

Based on your regression results and your answer in the previous question using the World Bank data, what happens to per capita expenditure on health care as per capita GDP increases?

a. The total expenditure stays constant because as the price increases the amount people buy stays the same.

b. The total expenditure decreases. As the per capita GDP increase people are healthier and so they spend less on health care on average.

c. None of the other answers are correct.

d. The expenditure increases. As per capita GDP increases people tend to spend more on health care.