In Exercise 69, we saw the relationship between CO2 measured at Mauna Loa and average global temperatures from 1970 to 2013. Here is a plot of average global temperatures plotted against the yearly average of the Dow Jones Industrial Average for the same time period

A regression produces the following output table (in part):
Dependent variable is Global Temperature (°C)
R-squared = 68.6%
Variable Coefficient
Intercept ...................................             14.09
DJIA ...........................................    0.0000459
a) What is the correlation between the DJIA and Temperature?
b) Explain the meaning of R-squared in this context.
c) Give the regression equation.
d) What is the meaning of the slope in this equation?
e) What is the meaning of the y-intercept of this equation?
f) Here is a scatterplot of the residuals vs. predicted values. Does this plot show evidence of the violation of any assumptions behind the regression? If so, which ones?

g) Suppose the Dow hits 20,000 in 2020. What mean Temperature does the regression predict for that level?
h) Does the answer in g) mean that when the Dow hits 20,000, the Temperature will reach the predicted level? Explain briefly.

Transcribed Image Text:

14.8 14.6 144... 2 14.2 14.0 2000 4000 6000 8000 10000 12000 14000 Yearly Dow Jones Industrial Average 0.2 01 0.0 t -0.3 14.2 143 144 145 14.6 147 Predicted Values