Use Computer Software to Find the Regression Equation A) $\mathrm{CO}=1.3+5.5 \mathrm{TAR}-1.3 \mathrm{NIC}$

question 55

Multiple Choice

Use computer software to find the regression equation. Can the equation be used for prediction?
-An anti-smoking group used data in the table to relate the carbon monoxide of various brands of cigarettes to their tar and nicotine content. $\begin{array}{ccc}\hline\text { CO } & \text { TAR } & \text { NICOTINE } \\\hline 15 & 1.2 & 16 \\15 & 1.2 & 16 \\17 & 1.0 & 16 \\6 & 0.8 & 9 \\1 & 0.1 & 1 \\8 & 0.8 & 8 \\10 & 0.8 & 10 \\17 & 1.0 & 16 \\15 & 1.2 & 15 \\11 & 0.7 & 9 \\18 & 1.4 & 18 \\16 & 1.0 & 15 \\10 & 0.8 & 9 \\7 & 0.5 & 5 \\18 & 1.1 & 16\\\hline\end{array}$

• A) \( \mathrm{CO}=1.3+5.5 \mathrm{TAR}-1.3 \mathrm{NIC} \);
• Yes, because the adjusted \( R^{2} \) is high
• B) \( \mathrm{CO}=1.37+5.50 \mathrm{TAR}-1.38 \mathrm{NIC} \);
• Yes, because the \( \mathrm{P} \)-value is high
• C) \( \mathrm{CO}=1.25+1.55 \mathrm{TAR}-5.79 \mathrm{NIC} \);
• Yes, because the \( \mathrm{P} \)-value is too low
• D) \( \mathrm{CO}=1.37-5.53 \mathrm{TAR}+1.33 \mathrm{NIC} \);
• Yes, because the \( R^{2} \) is high

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Definitions:

Demand Deposits

Bank accounts that allow the account holder to withdraw funds without prior notice, such as checking accounts.

Deposit Expansion Multiplier

The ratio that quantifies the potential increase in total bank deposits that can result from an initial deposit, through the process of banks lending and creating more deposits.

Reserve Ratio

The fraction of deposits that banks are required to keep on hand and not lend out, as mandated by banking regulations.

Open Market Operations

The buying and selling of government securities in the open market by a central bank to control the supply of money.