The household saving rates (percentage of disposable household income that goes into savings) have been reported for several countries —including the United States, Canada, France, Germany, and Japan—for the years 1980 through 1997. The percentages are listed in data file XR02069.
a. Construct a scatter diagram using the household saving rates in the United States and Canada as the two variables. It doesn’t really matter which one you consider to be the independent variable. In the years when U.S. saving rates were higher, did those in Canada seem to be higher as well?
b. Fit a linear equation to the scatter diagram. Is the slope positive or is it negative? Is the sign of the slope consistent with your intuitive observation in part (a)?