rates in the twelve countries of the European Community in 1992. We would expect interest rates to be highest in those countries where inflation is highest, and a glance at the numbers in the table indicates that this is so. To obtain a fuller picture of the relationship between these two quantities, we have graphed the data on the scatter plot of Figure 2.19. It appears from this graph that, for the eight countries with the lowest levels of interest rates and inflation, there is little relationship between these two variables. However, the four countries with the highest inflation rates also have the highest interest rates. One of these (Greece) stands out as having higher levels of both inflation and interest rates than the others.
Scatter plots such as Figure 2.19 can provide a pictorial view of the relationship between a pair of numerical variables. Statistical techniques to be discussed in Chapters 12-14 allow a more detailed analysis of this type of data.
TABLE 2.16 Consumer price inflation and long-tenn interest rates | |||||
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If you're like a lot of people watching the recession unfold, you have likely started to look at your finances under a microscope. Perhaps you have started saving the annual savings rate by people has started to recover a bit.
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