Question 3 (10 marks)

Global pandemic during past 3 years impacts almost all the industries across the word. Most of the industries had substantial negative impact while few industries succeeded due to new business opportunities.

One another significant impact of global pandemic is the increasing inflation. Due to this Reserve Bank of Australia has increased cash rate 8 times during 2022. The impact of this rate hikes on real estate market is controversial. In order to assess this a research has gathered following data set over the last 10 months period related to one of the main builders in Melbourne.

Month	1	2	3	4	5	6	7	8	9	10
Interest rate(lending)	3.2%	3.1%	3.0%	3.3%	4.1%	4.2%	4.35%	4.65%	5.0%	5.2%
New contracts	200	215	250	220	180	175	200	190	195	200

1. Determine the regression line and predict the expected number of new contracts in this company if the lending interest rate go up to 5.35% in next month.
2. Calculate the correlation coefficient between lending rate and new contracts and critically review the possible impact of further interest rate changes on construction industry (on prospective home owners, employees, employers in the construction industry. (5 marks