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CIMAPRA17-BA1-1 Exam - Topic 2 Question 111 Discussion

A research business compiles the following data for Country D over 8 years:* Household expenditure, y (in millions of constant 20X6 dollars);* The number of fixed broadband internet subscribers, x (in thousands).Based on this information the following regression model is developed:y = 332668 * 45.8x - 0 003x2Which of the following statements is correct?
D) The model makes accurate forecasts on household final consumption expenditure in Country and therefore it should be widely applied to most countries and regions.
A) The model is based on historical data, so it is of little use in making forecasts
B) 1 percent increase in the number of fixed broadband internet subscribers will lead to 0 3 percent increase in household final consumption expenditure.
C) A non-linear relationship is suggested by the model between household final consumption expenditure and the number of fixed broadband internet subscribers.

CIMAPRA17-BA1-1 Exam - Topic 2 Question 111 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam
Question #: 111
Topic #: 2
[All CIMAPRA17-BA1-1 Questions]

A research business compiles the following data for Country D over 8 years:

* Household expenditure, y (in millions of constant 20X6 dollars);

* The number of fixed broadband internet subscribers, x (in thousands).

Based on this information the following regression model is developed:

y = 332668 * 45.8x - 0 003x2

Which of the following statements is correct?

Show Suggested Answer Hide Answer
Suggested Answer: D

by Selene at May 05, 2025, 02:34 PM

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Carma
7 months ago
D is a stretch, can it really apply to all regions?
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Gerald
7 months ago
B sounds plausible, but is it really that precise?
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Pansy
8 months ago
C definitely highlights the non-linear aspect, good catch!
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Elliott
8 months ago
I disagree, A is too pessimistic about historical data.
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Luisa
8 months ago
The model shows a non-linear relationship, so C seems right.
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Trina
8 months ago
I recall that just because a model works for one country doesn't mean it applies everywhere, so option D seems overly optimistic.
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Ardella
8 months ago
The quadratic term in the model suggests a non-linear relationship, so I feel like option C could be correct.
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Mary
9 months ago
I think I practiced a question similar to this where we analyzed the coefficients. I'm not sure about the 0.3 percent increase mentioned in option B though.
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Carri
9 months ago
I remember discussing how historical data can sometimes limit the accuracy of forecasts, so option A might be a valid point.
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Bambi
9 months ago
I'm feeling pretty confident about this one. The model seems clear, and I think I can use the information provided to determine the correct statement.
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Willow
9 months ago
Okay, the key here is to focus on what the model is actually telling us. The historical data may have limitations, but the model itself could still be useful for making forecasts.
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Josefa
9 months ago
Hmm, I'm a bit confused by the non-linear relationship in the model. I'll need to make sure I understand how to interpret that before answering.
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Shenika
10 months ago
This looks like a pretty straightforward regression question. I'll need to carefully analyze the model equation and think about the implications of the coefficients.
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Lemuel
1 year ago
That's true, but the model itself shows a non-linear relationship, so I think C is the best answer.
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Earleen
1 year ago
But isn't statement B also correct? A 1 percent increase in subscribers leads to a 0.3 percent increase in expenditure.
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Dwight
1 year ago
Haha, Option A is a classic. Of course the model is based on historical data - what else would it be based on, the future??
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Mabelle
1 year ago
Yeah, it's common sense that a model is based on historical data.
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Leonardo
1 year ago
I agree, Option A is pretty obvious.
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Iola
1 year ago
I agree with Lemuel, the model suggests a non-linear relationship.
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Lemuel
1 year ago
I think the correct statement is C.
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Hildegarde
1 year ago
Option D is definitely not correct. Applying a model developed for one country to 'most countries and regions' is a recipe for disaster. Someone needs to brush up on their econometrics!
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Maurine
1 year ago
C: The model seems to suggest a non-linear relationship between household expenditure and the number of broadband subscribers.
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Elliott
1 year ago
B: I agree, it's important to consider the specific characteristics of each country before applying a model.
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Alecia
1 year ago
A: Option D is definitely not correct. Applying a model developed for one country to 'most countries and regions' is a recipe for disaster.
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Florinda
1 year ago
I'm not so sure about option B. A 1% increase in broadband subscribers leading to a 0.3% increase in household expenditure seems a bit too precise. I'd be cautious about relying on that specific percentage change.
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Keneth
1 year ago
I think it's important to consider other factors that could influence household expenditure as well.
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Denny
1 year ago
Yeah, it's always good to be cautious with these types of predictions.
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Daniel
1 year ago
I agree, it does seem like a very precise estimate.
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Kimberely
1 year ago
I agree with Yoko. The quadratic term in the regression equation suggests a non-linear relationship. This is an important consideration when using the model for forecasting.
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Lashon
1 year ago
A: Definitely. It shows that the relationship between household expenditure and broadband subscribers is not linear.
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Reuben
1 year ago
B: I agree. It's important to consider this when using the model for forecasting.
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Gladis
1 year ago
A: I think option C is correct. The quadratic term in the regression equation suggests a non-linear relationship.
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Yoko
1 year ago
Option C seems to be the correct choice. The model indicates a non-linear relationship between household expenditure and broadband subscribers, which makes sense intuitively.
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Bette
1 year ago
Definitely. It shows that the relationship is more complex than just a simple linear one.
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Ashleigh
1 year ago
Yes, it does. It's interesting to see how broadband subscribers can impact household expenditure in a non-linear way.
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Benedict
1 year ago
I agree, option C does make sense. A non-linear relationship between the two variables seems plausible.
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