There seems to be a clear relationship between x = the prevailing mortgage inter

Question

There seems to be a clear relationship between x = the prevailing mortgage interest rates and y = the number of new houses being built per month in a midwestern city over a period of 18 months. A scatterplot of the data collected shows that the linear model is appropriate. The equation of the least-squares regression line is Number of new houses = 672.89 – (30.65 × interest rate) and r2 = 0.49 The association or direction between the interest rate and the number of new houses being built is

a) negative.

b) positive.

c )zero.

d) unknown.

Explanation / Answer

OPTION A: NEGATIVE. [ANSWER]

************

You can see this using the slope of the trendline.

Here,

Number of new houses = 672.89 – (30.65 × interest rate)

Thus,

slope = -30.65, which is negative.

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