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.
Action
Use the attached MS Excel spreadsheet containing the CCIs for nine years and the median household incomes for the same nine years published by the U.S. Census Bureau.
Perform a correlation and regression analysis to predict CCI using median household income. Discuss the following:
- Scatter Diagram
- R, R2 and 1-R2
- The regression equation
- Standard error of estimate
- 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?