Question

1. In a U.S. research report about how much people spend annually on food, the independent variable is annual income. It is expressed in dollars. For a version of the report published in Brazil, the values of the independent variable are converted to Brazilian reals ($1 = 5.5 BRL). Write a sentence or two to answer each of the following questions. (2 points each)

1. How, if at all, does the correlation between annual income and food expenditures change?

2. How, if at all, does the slope for the regression equation predicting food expenditures from annual income change?

Answer 1

See that as given ,when you are converting the annual income variable from $ to BRL you are basically multiplying the annual income variable with the multiplying factor 5.5.So it is nothing but change of origin of the data.Now we know that

So correlation between annual income and food expenditures does not change.

Now the slope of the regression equation predicting food expenditures from annual income change.

because

So the slope of the regression equation predicting food expenditures from annual income will be multiplied by the factor 5.5.