1. The Country Bureau of Labor Statistics produces consumer price indexes for several different categories. Shown here are the percentage changes in consumer price indexes over a period of 20 years for food, shelter, apparel, and fuel oil. Also displayed are the percentage changes in consumer price indexes for all commodities.

1. Use the SPSS Software to compute the correlation between each pair. Which independent variable has the strongest correlation with the dependent variable? Does it appear there will be any problems with multicollinearity? (6 Marks)

2.

Carry out multiple regression analysis and develop a multi-factor model that attempts to predict all commodities by the other four variables. Comment on the result analysis including the individual regression coefficients, adjusted R squared and F-ratio in the context of the problem (12 Marks)

3. Predict the percentage changes in consumer price indexes for all commodities whose the changes in consumer price indexes for food=1.5, shelter=1.7, apparel=1.9 and fuel oil=2.5. (2 Marks)