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FRED (Federal Reserve Economic Data), a database of more than 3000 U.S. economic time series, contains historical data on foreign exchange rates. The following data show the foreign exchange rate for the United States and China.
(Rates uploaded)
a) Construct a time series plot. Does a linear trend appear to be present?
b) Use simple linear regression analysis to find the parameters for the line that minimizes MSE for this time series
c) Use the trend equation to forecast the exchange rate for August 2008.
d) Would you feel comfortable using the trend equation for to forecast the exchange rate for December 2008?
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