The table on the next page shows Canada’s exchange rate for US$1 for a 13-year period. Use these data and multiple regression analysis to predict the exchange rate from the different variables like price index in relation to OECD (Organisation for EconomicCo-operation and Development) countries, relative unit labour cost (change percentage), manufacturing producer price index (PPI), and Statistics Canada’s Consumer Price Index (CPI). Comment on the results.

Transcribed Image Text:

Year 1 2 3 4 5 6 7 8 9 10 11 12 13. CAD $ per US$ 1.4857 1.4851 1.5488 1.5693 1.4011 1.3010 1.2118 1.1344 1.0741 1.0670 1.1431 1.0302 0.9895 *Year 7 = 100 Unit Cost OECD Change % -0.4 2.0 2.3 1.1 2.5 2.4 2.2 3.8 3.4 3.0 3.0 0.4 0.4 Price Index* 83.1 83.6 81.1 80.4 89.4 94.2 100.0 105.6 109.6 107.3 101.9 111.8 114.3 **Year 4 = 100. PPI-Mfg. CPI** 1.8 92.9 4.3 95.4 1.0 97.8 0.1 100.0 -1.2 102.8 3.2 104.7 1.6 107.0 2.3 109.1 1.5 111.5 4.3 114.1 -3.5 114.4 1.0 116.5 4.6 119.9