# Question: Each month the Department of Commerce releases its estimate of

Each month, the Department of Commerce releases its estimate of construction activity. A key measure is the percentage change in the number of new homes under construction. Are changes in home construction associated with changes in the stock market? These data show the percentage change in the number of new, privately owned housing units started each month, as reported by the Department of Commerce. The data also include the percentage change in the S&P 500 index of the stock market.

(a) Before looking at these data, do you expect these variables to be associated? If so, what do you anticipate the correlation to be?

(b) Draw the scatterplot of the percentage change in the S&P 500 index on the percentage change in the number of new housing units started. Describe the association.

(c) Find the correlation between the two variables in the scatterplot. What does the size of the correlation suggest about the strength of the association between these variables?

(d) Suppose you know that there was a 5% increase in the number of new homes. From what you’ve seen, can you anticipate movements in the stock market?

(a) Before looking at these data, do you expect these variables to be associated? If so, what do you anticipate the correlation to be?

(b) Draw the scatterplot of the percentage change in the S&P 500 index on the percentage change in the number of new housing units started. Describe the association.

(c) Find the correlation between the two variables in the scatterplot. What does the size of the correlation suggest about the strength of the association between these variables?

(d) Suppose you know that there was a 5% increase in the number of new homes. From what you’ve seen, can you anticipate movements in the stock market?

**View Solution:**## Answer to relevant Questions

Match the value of the correlation to the data in the scatterplot. (a) r = 0 (b) r = -0.9 (c) r = 1 (d) r = 0.4 The Minnesota Department of Transportation would like to measure the weights of commercial trucks on its highways without the expense of maintaining weigh stations along the highway. Weigh stations are expensive to operate, ...A scatterplot is not so useful for numerical data when the data include many copies. In Exercise 49, there are 50 cases of male customers who paid with cash. That’s 50 pairs of values with Sex = 1 and Cash = 1. (a) What ...1. The sample space S for this experiment has 10 elements. 2. The assumption of independence implies that each shopper has the same probability for carrying a bag. 3. P (A) + P (B) = P (A or B). 4. The probability that both ...Count the number of cars that pass by an intersection during consecutive five-minute periods on a highway leading into a city. Would these data allow us to use the Law of Large Numbers eventually to learn P(more than 50 cars ...Post your question