Explain the Difference Between Confidence Intervals and Prediction Intervals

question 6

Essay

Explain the difference between confidence intervals and prediction intervals. Be sure to include the type of situation in which each type of interval would be used. Which interval is likely to be wider and why?

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Definitions:

Misery Index

An economic indicator created by adding the unemployment rate to the inflation rate, intended to measure economic discomfort.

Year

A period of time equal to 365 days, or 366 in leap years, used for calculating time in calendar terms.

Recession

An interim period of economic fallback, where there’s a noticeable dip in commercial and industrial outputs, customarily marked by a decrease in GDP in two successive quarters.

Depression

a severe and prolonged downturn in economic activity, characterized by significant fall in spending and high unemployment.