3. Personal debt According to The World Almanac and Book of Facts 2004, the debt

Question

3. Personal debt According to The World Almanac and Book of Facts 2004, the debt per capita for the years 1990-2001 gives the following scatterplot: Scatterplot of Debt per capita (S) vs Debt Year 20000 9000 18000 17000 16000- 15000 14000 13000 1990 19911992 1993 1994 1995 1996 Debt Year Regression output gives the equation of the regression line as Debt =-2,23 1,2264 1 128(Year) with R: 98.8%. a. What is the response variable? b. Estimate the correlation coefficient r? c. Explain in X and Y units what the slope of the line means. d. Is the y-intercept a sensible value? Explain. e Explain in X and Y units what R2 = 98.8% means.

Explanation / Answer

SolutionA:

Response variable is outcome of study

Here y=Debt

Debt is response variable

Solutiomb:

R 2=98.8

r=sqrt(0.988)

r=0.9939

Solutionc:

slope=1128

change in debt/change in year=1128

For a each increase in year Debt increase by 1128

Solutiond:

if Year=0

Debt=-2231226+1128*0

=-2231226

No meaninngwith y intercept

Solutiond:

No..it has got no meaning

Solutione:

R2=9.98% means

98.8% variation in Y is explained by X

that is 98.8% variation in Debt is explained by Year .

Good model.

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