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Basket of Goods 1 Coefficients Standard Error t Stat P-value Intercept 2.562 0.648 3.953 Basket of Goods1 0.348 0.063 5.517 Basket of Goods 2 Coefficients

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Basket of Goods 1 Coefficients Standard Error t Stat P-value Intercept 2.562 0.648 3.953 Basket of Goods1 0.348 0.063 5.517 Basket of Goods 2 Coefficients Standard Error t Stat P-value Intercept 4.623 0.166 27.853 0 Basket of Goods2 0.113 0.015 7.625 0 Basket of Goods 3 Coefficients Standard Error t Stat P-value Intercept 5.260 0.389 13.515 0.000 Basket of Goods3 0.068 0.035 1.964 0.054 Regression Statistics Basket of Goods 1 Basket of Goods 2 Basket of Goods 3 Multiple R 0.714 0.254 R square 0.352 0.509 0.064 Adjusted R Square 0.341 0.501 0.048 Standard Error 0.481 0.296 0.544 Observations 58 58 58Assume that assumptions for simple linear regression are satisfied. Use the above tables to answer the following questions, either choose the most correct option, or type in the answer to the number of decimal places specified. 1. (1 mark) The correlation between CPI and Basket of Goods 1 is: (3dp - remember to include a negative sign if appropriate) The economists are interested in which basket of goods most accurately predicts CPI. Use the regression results to answer the following questions. 2. (1 marks) Which variable is a better predictor of CPI? A: Basket of Goods 1. B: Basket of Goods 2. C: Basket of Goods 3. D: None of them is a good predictor of CPI. 3. (2 marks) Why? Choose the most appropriate answers to justify your answer to Question 2 above. A. Correlation between CPI and Basket of Goods 1 is the highest. B. Correlation between CPI and Basket of Goods 2 is the highest. C. Correlation between CPI and Basket of Goods 3 is the highest. D. The slope of regression equation for the linear relationship between CPI and Basket of Goods 1 was significantly different than zero. E. The slope of regression equation for the linear relationship between CPI and Basket of Goods 2 was significantly different than zero. F. The slope of regression equation for the linear relationship between CPI and Basket of Goods 3 was significantly different than zero. G. Both A & D H. Both B & E I. Both C & F J. There is not enough information to make a decision

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