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Situation: The conference Board produces a Consumer Confidence Index (CCI) that reflects people's feelings about general business conditions, employment opportunities, and their own income prospects.

Situation:

The conference Board produces a Consumer Confidence Index (CCI) that reflects people's feelings about general business conditions, employment opportunities, and their own income prospects. Some researchers may feel that consumer confidence is a function of the median household income.

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Use the below containing the CCIs for nine years and the median household incomes for the same nine years published by the U.S. Census Bureau.

CCIMedian House Hold Income ($1,000)

116.837415

91.536770

68.535501

61.635047

65.934700

90.634942

10035887

104.636306

125.437005

Perform a correlation and regression analysis to predict CCI using median household income. Discuss the following:

a.Scatter Diagram

b.R, R2 and 1-R2

c.The regression equation

d.Standard error of estimate

e.The test of hypothesis with the 5-step process. Use a .05 level of significance. Does median household income appear to be good predictor of the CCI? Why or why not?

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