Textbook Question Solutions: Chapter 3
1. First we draw a scatter plot of the data as in Figure 3.1a.
y
x
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Figure 3.1a
a) Although the correlation coefficient does not appear to be very large, x and y
are positively correlated.
b) For this part of the problem, we need to draw the data in the form of two time
series plots in Figure 3.1b.
Perio
d
x
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1000
x
y
y
Figure 3.1b
The variable y lags the variable x.
c) The two time series appear to be characterized by persistence.
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