The index of deflated turnover for retail trade shows the activity in volume of the retail trade sector. This index is reported with 2005=100. The accompanying table holds the index for 43 countries for the years 2007 and 2010. Complete parts?a) through?d).

Country 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43

Index_2007 109.6 102.1 134.4 103.5 134.3 111.6 91.3 116.1 115.9 116.6 103.1 131.3 109.9 106.4 99.3 111.3 103.2 115.9 115.4 101.2 99.3 109.4 139.4 121.4 108.5 104.1 104.7 107.7 108.3 112.6 124.1 101.7 111.3 143.8 132.7 113.8 108.7 119.3 105.3 106.9 107.3 108.6 102.1

Index_2010 116.6 106.3 170.6 104.6 125.4 119.6 135.2 123.2 118.8 118.2 93.9 101.3 111.9 112.4 97.3 93.5 93.3 78.6 106.5 97.4 100.9 121.8 91.6 91.9 123.6 104.1 104.3 101.9 103.4 116.9 143.1 99.1 143.4 147.4 152.4 109.4 108.4 120.4 91.2 111.6 114.3 111.7 94.4

a) Find a regression model predicting the 2010 index from the index in 2007 for the sample of 43 countries.

2010index= __+__ 2007 index

?(Round to three decimal places as?needed.)

?b) Examine the residuals to determine if a linear regression is appropriate.

Construct a plot of the residuals against x. Choose the correct graph below.

O A. O B. O C. O O 50- 50- 50- O 25 25 25 Residual Residual 0- Residual 0- -25 -25- 25 -50- -50 -50- 80 100 120 140 160 80 100 120 140 160 80 100 120 140 160 2007 Index 2007 Index 2007 Index\f