Assume that you have been hired by the Reserve Bank of Australia (RBA) as a Research Officer to assist the Monetary Policy Committee. Your task is to assist the Committee with data analyses to allow the Committee to maintain the inflation rate between 2-3 percent and keep the cash rate (i.e. official interest rate) low. In order to provide the Committee valuable information for the upcoming meeting next week, you have been asked to analyse data on inflation, unemployment and Gross Domestic Product (GDP) growth rate from 1989 to 2019. The data is provided to you in an Excel spreadsheet file BUSS101-S1AT3.XLS.

Perform the following analyses on the data provided to you:

1. Produce a table of summary statistics (mean, median, mode and standard deviation) for the following variables in the Excel spreadsheet: inflation rate, unemployment rate, and GDP growth rate. 

2. Produce a graph of the inflation rate from 1989 to 2019.

3. Produce scatter plots of the following pairs of variables: (1) Inflation rate vs. Unemployment rate; (2) Inflation rate vs. GDP growth rate; and Inflation rate vs. Time (trend).

4. Perform multiple regression analysis with inflation rate as the dependent variable and unemployment rate, GDP growth rate, and the time trend as independent variables. Use the Excel Regression tool to conduct the multiple regression analysis. 

5. Use the multiple regression model generated in Requirement 4 above to predict the inflation rate in 2022. 

Based on your analyses in requirements 1 to 5 above, write a report to the Committee about the behaviour of inflation, unemployment and GDP growth from 1989 to 2019. In your report, include responses to the following:

1. Using the results of Requirement 1 above, discuss the mean, median, mode, and standard deviation of the inflation rate.

2. Using the graph generated in Requirement 2 above, explain the trend in the inflation rate from 1989 to 2019.

3. Using the scatter plots produced in Requirement 3 above, discuss the relationship between: (1) Inflation rate vs. Unemployment rate; (2) Inflation rate vs. GDP growth rate; and Inflation rate vs. Time (trend).

4. Discuss the output of the multiple regression model produced in Requirement 4 above. Include in your discussions, assessments of the overall strength of the regression model, the significance of each regression coefficient and other indicators of model fit. 

5. Based on the predicted inflation rate from Requirement 5 above, advise the RBA whether they should or should not increase the cash rate (i.e. official interest rate) in 2022.

BUSS101-S1AT3.XLS