Conclusion of Business Statistics
An indisputable analysis of the variables and use of regression line
An indisputable analysis of the variables and use of regression line to state the existing connection between government expenditure and economic development paints an interesting illustration. Government expenses relates to a healthy connection with economic progression. The common fact is that government expenditure is a macro- economic policy that grows the supply of money in a country’s economy and the same time provides jobs to its population. Judging from the linear regression analysis, it can be seen, the coefficient of the existent connection between the government expenditure and economic development. The theory of linear regression analysis postulates that every other factor remained the same while establishing the connection between variables. The scatter diagram showed huge concentration of dot along the regression line showing a positive correlation and direct relationship. While government expenditure is theoretically explained as critical in expanding the size of gross domestic product, the statistical tests of significance provide a clear procedure to confirm the underlying reality. In essence, the regression analysis captures many other statistical tools such as the coefficient of determination, denoted with R2 which are critical in making informed judgment in interpretation of the regression line. The regression line representing economic growth as dependent variable and government spending as independent variable shows an upward sloping curve indicating a positive relationship.
The coefficient of determination
The coefficient of determination estimated at 0.99 indicates that the 99% change in dependent variable is explained by the independent variable which in this case is economic growth and government spending respectively. Other assumptions that constitute the linear regression line include heteroscendacity and autocorrelation which are important aspects of error. Considering the variables in question, the assumptions must be included as conditions that help the linear regression line results to reflect practical evidence. Despite possible extraneous variables, the linear regression line proves that government spending positively influences economic growth.
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