The head of economic development for Nutria Haven, Louisiana, has been criticized by the mayor for doing too little to stimulate business activity. The mayor claims that fluctuations in the number of building permits each year point to a pattern of incompetence in the economic development office. The head of economic development has countered that variations in business activity are largely the result of changes in the economy.

To see whose viewpoint is more accurate, the chief fiscal analyst regresses the number of building permits for each of the last 10 years on two variables. Because the mayor has argued that the office has always had the resources needed to stimulate business activity, he selects the annual budget for the economic development office (X₁, in millions of dollars) as one independent variable. To see whether external forces are responsible, he selects the average prime lending rate for each year (X₂) as the second independent variable, because fluctuations in interest rates are known to affect business activity. He obtains the following results in the regression analysis: 

Interpret the slopes, intercept, R², and adjusted R². Based on the regression results, are variations in performance due to internal factors under the control of the economic development director or to external factors beyond his control?  

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561 = Ŷ= 2,659.00003X₁ .00004 Sb₂ - 195X₂ = 77.95 R² = .82 Adj. R² = .76