what is the dependent variable and what are the independent variables in this regression analysis

INSTRUCTIONS TO CANDIDATES

ANSWER ALL QUESTIONS

a)   Analyze the distribution of unemployment using histogram, and compute appropriate descriptive statistics. Write a paragraph describing distribution of unemployment and use appropriate descriptive statistics to describe center and spread of the distribution. Discuss your findings. Also, explain if you see any outliers, if so, why do you think they are outliers? Include the histogram.

b)  Create scatterplots to visualize the associations between unemployment and the other variables. Include the scatterplot. Discuss the patterns and association displayed by the scatterplot.  

c)  Compute correlation values of unemployment vs the other variables. Include the relevant output that shows the correlation values. Interpret the correlation values, and discuss which pairs of variables appear to be strongly/not strongly associated.

d)  What is the dependent variable and what are the independent variables in this regression analysis?

e)  Use SAS to run the full regression model to predict unemployment from age, education, income and balance. Include the relevant regression output. Analyze the model. Which predictors have a significant effect on unemployment, explain why you came to the conclusion that they are significant or insignificant?                                         

f) If one of the predictors is not significant, remove it from the model and refit the new regression model. Include the relevant regression output. Make sure you include all the steps and outputs at arriving at the final model. Write the expression of the newly fitted regression model.

g) Interpret the value of the parameter estimates for the variables in the model.

h)  Include the portion of the output that includes the R2 and Adj-R2 coefficient values. Report the value for the R2 and Adj-R2 coefficient and describe what it indicates. What can you conclude?

i)   According to census data, the population for a certain zip code area has median age equal to 44.2 years, median education equal to 11.5 years, median income equal to $51,324 and balance is $34,200. 

(i)  Use the final model computed in step (f) above to compute the predicted unemployment for the zip code area.

(ii)  If the observed unemployment for the zip code area is 13.5%, what’s the model prediction error?

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