Answer to Question #348568 in Statistics and Probability for Kheti

Question

A University student is studying inflation and money supply. The following statistics were

provided to the student.

Money supply in rands R Inflation 28000 3,42 28000 3,60 21000 4,84 14000 7,81 35000 1,14 14000 8,51 14000 7,87 28000 2,89 21000 4,91 35000 1,89 35000 1,72 21000 4,47

i. Determine the dependent and independent variables and explain your selection.

[3]

ii. Find the straight-line regression equation that represent the relationship between

the dependent and independent variable. [7]

iii. What is the estimated inflation rate associated with a money supply of R31500?

[3]

iv. What is the money supply level associated with zero inflation rate [3]

v. Calculate and interpret the covariance between money supply and inflation rate.

[4]

vi. Calculate the correlation coefficient between the two-variable displayed in the

table? [3]

vii. What does the correlation coefficient tell us about the relationship of the two

variables in the table above? [2]

Answer 1

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