Chapter 8, Problem 43E

TBill rates 2016 revisited In Exercise 41, you investigated the federal rate on 3-month Treasury bills between 1950 and 1980. The scatterplot below shows that the trend changed dramatically after 1980, so we computed a new regression model for the years 1981 to 2015.

Here’s the model for the data from 1981 to 2015 (in years since 1950):

Dependent variable is Rate

R-squared = 79.1% s = 1.584

Variable	Coefficient
Intercept	8.5922
Year – 1950	–0.29646

1. a) How does this model compare to the one in Exercise 41?
2. b) What does this model estimate the interest rate will be in 2020? How does this compare to the rate you predicted in Exercise 41?
3. c) Do you trust this newer predicted value? Explain.
4. d) Would you use either of these models to predict the TBill rate in the future? Explain.