In a regression of investment on the interest rate, the results in Table P-8 were observed over a 10-year period.

a. Is the relationship between these variables significant?
b. Can an effective prediction equation be developed?
c. If the average interest rate is 4% five years from now, can yearly investment be forecast?
d. Calculate and interpret r2.
e. Discuss correlation and causation in this example.

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TABLE P-8 Yearly Invmnt Average Interest Yearly Investment Average Interest ($1,000s) Rate (%) (81,000s) Rate (%) 3.8 3.7 4.5 4.9 6.2 1,060 4.8 5.1 940 920 1.110 1590 2,050 2,070 2,030 1,780 1,420 5.1 4.8