Question

he probability that house sales will increase in the next 6 months is estimated to be 0.50 The probability that house sales and interest rates will go up during the next 6 months is estimated to be 0.32. The probability that house sales or interest rates will increase during the next 6 months is 0.80.

The probability that interest rates will increase over the next 6 months is ________.

Answer 1

The probability that house sales will increase in the next 6 months, P(S) = 0.50

The probability that house sales and interest rates will go up during the next 6 months, P(S and I) = 0.32

The probability that house sales or interest rates will increase during the next 6 months, P(S or I) = 0.80

P(S or I) = P(S) + P(I) - P(S and I)
P(I) = P(S or I) - P(S) + P(S and I)
= 0.8 - 0.5 + 0.32
= 0.62

The probability that interest rates will increase over the next 6 months is 0.62