In problem, two linear models are given for the data. For each model,
(a) find the residuals and their sum;
(b) find the sum of the squares of the residuals;
(c) decide which model is the better fit. (See Example 2.)
Finance The following table shows the amount of consume! credit outstanding (excluding real estate loans) in trillions of dollars†:
Year | 1995 | 2000 | 2002 | 2004 | 2006 |
Credit | 1.1 | 1.7 | 2.0 | 2.2 | 2.4 |
Let x = 0 correspond to 1995. Two equations that model the data are y = .12x + 1.1 and y = .1x + 1.3.
†Board of Governors of the Federal Reserve System, Statistical Supplement to the Federal Reserve Bulletin.
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