The following table shows the median income in thousands of

The following table shows the median income in thousands, of dollars, of American families for 2003 through 2008.

A) Use exponential regression to model the median income M, in thousands of dollars, as an exponential function of t, the number of years since 2003. Round parameters to three decimal places.

B) What is the yearly percentage growth rate in the median family income during this period? Round your answer to the nearest tenth of a percent.

C) From the 2003 to 2008, inflation was about 3% per year. Did median family income keep pace with inflation during this period? Why or why not?

Solution

A)

Exponential regression equation = 52.587 * e^(0.0341 *t) where t = Year - 2003

Yearly percentage growth income = 2.62% , 3.94% , 3.95% ,5.05 % , 0.26%

Period growth RATE IS (61.52/52.68)^(0.2) - 1 = 3.15%

C) Yes As average growth rate is 3.15% which is more than 3% , the median income kept pace with the inflation.