The Federal Reserve is performing a preliminary study to determine the relationship between certain economic indicators and annual percentage change in gross national product GNP$.$ Two such indicators being examined are the amount of federal government$’$s deficit $($in billion dollars$)$ and the Dow Jones industrial average $($the mean value over the year$).$ Data for six years are given below.

 

a$)$ Calculate the regression equation that best describes the data

b$)$ What percentage change in GNP would be expected in a year in which the federal deficit was $$240$ billion and mean Dow Jones value was $300$ 

c$)$ Comment on R and R square

d$)$ Interpret the p$-$value in terms of strength of the variables used in the model

 

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Change in GNP 2.5 -1 14 1 1.5 13 Federal Deficit 100 400 120 200 180 80 Dow Jones 2850 2100 3300 2400 2550 2700 Change in GNP 2.5 -1 14 1 1.5 13 Federal Deficit 100 400 120 200 180 80 Dow Jones 2850 2100 3300 2400 2550 2700