A regression analysis of the Australian dollar's value on the inflation differential between the United States and Australia produced a coefficient of .8. Thus, for every 1 percent increase in the inflation differential, the Australian dollar is expected to depreciate by .8 percent.

Question

Quizplus · Accepted Answer

The coefficient of .8 indicates a positive relationship between the inflation differential and the Australian dollar's value, not a negative relationship where the dollar depreciates. Therefore, the statement is false.

A Regression Analysis of the Australian Dollar's Value on the Inflation