(continuation) We will use the model you estimated in question c of the preceding exercise to explain the sharp increase in stock prices in 1985 and 1986.

a. Stock prices increased by 42.78 in 1985. What is the predicted effect on stock prices of the 0.3 drop in the unemployment rate that occurred? Of the 1.61 drop in the interest rate that occurred? According to your estimated model, was the increase in stock prices in 1985 mostly due to falling unemployment or falling interest rates?

b. In 1986 the interest rate fell by 1.95 and the unemployment rate was constant.

Using the approach in question

a, was the 42.52 increase in stock prices in 1986 mostly due to changes in unemployment or interest rates?