Presidential candidate Rebecca Hendrick wants to know whether it would be worthwhile to challenge the incumbent next year. If she decides to run, she feels the key issue should be inflation, so she is interested in whether or not the inflation rate (X, in percentage increase in the consumer price index) is related to the percentage of the vote received by the presidential candidate of the party in power. Using 12 elections, the following regression is found:

Interpret this equation. Present a hypothesis and a null hypothesis, and test them. If inflation is 8%, predict the vote for the incumbent’s party, and place an 80% confidence limit around it.

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Ỷ = 54.3 – .84XS, = .24 ² = 34 Sylx = 1.9 X = 6.7 Sx = 3