Question: Spending on credit cards decreases after the Christmas spending season

Spending on credit cards decreases after the Christmas spending season (as measured by amount charged on a credit card in December). The data set on the DVD with the same name as this exercise contains the monthly credit card charges of a random sample of 99 cardholders.
a) Build a regression model to predict January spending from December’s spending.
b) How much, on average, will cardholders who charged $ 2000 in December charge in January?
c) Give a 95% confidence interval for the average January charges of cardholders who charged $ 2000 in December.
d) From part c, give a 95% confidence interval for the average decrease in the charges of cardholders who charged $ 2000 in December.
e) What reservations, if any, do you have about the confidence intervals you made in parts c and d?

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  • CreatedMay 15, 2015
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