Correlation
To determine how the number of housing starts is affected by
mortgage rates an economist recorded...
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Statistics
Correlation
To determine how the number of housing starts is affected bymortgage rates an economist recorded the average mortgage rate andthe number of housing starts in a large country for the past 10years. These data are listed here.
Rate
Starts
year #1
8.5
115
year #2
7.8
111
year #3
7.6
185
year #4
7.5
201
year #5
8
206
year #6
8.4
167
year #7
8.8
155
year #8
8.9
117
year #9
8.5
133
year #10
8
150
        Â
What is the dependent and independent variable?
Prepare a scatter plot. What is the direction ofcorrelation?
What is the equation of the regression line?
What is the coefficient of determination (r2) andinterpret the meaning of it?
Calculate the correlation coefficient (r) and interpret themeaning of it.
Predict the number of housing starts if the interest rate is8.65.
Would it be possible to use this regression model to predictthe number of housing starts for an interest rate of 2.45?Why?
Answer & Explanation
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a Here we need to determine how the number of housing starts isaffected by mortgage ratesHence mortgage rates is independent variable and number ofhousing starts is dependent
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