Question

Consider the data in the Excel file Consumer Price Index. Use simple linear regression to forecast the data. What would be the forecasts for the next two months? (Your regression equation should be look like CPI = a + b T. The T is year and 1990=1; 1991=2; 1992=3; 1993=4; 1994=5; 1995=6; 1996=7; 1997=8; 1998=9; 1999=10) Year CPI 1990 169.3 1991 170.0 1992 172.4 1993 175.3 1994 177.2 1995 176.8 1996 179.1 1997 180.1 1998 ? 1999 ?

Answer 1

Answer:

CPI(1998) = 182.32

CPI(1999) = 183.94

Explanation:

1.  

Using excel regression analysis, the regression results are below:

This gives regression equation as: CPI = 167.73 + 1.62T

Kindly check the attached image below for the step by step explanation.

In order to find CPI values for 1998 and 1999, substitute value of T = 9 and 10 respectively

This gives:

CPI(1998) = 182.32

CPI(1999) = 183.94