Let the mortgage rate be the dependent variable and use the unemployment rate, unemployment duration, real GDP, housing starts, and the CPI as explanatory variables. Conduct a multiple regression estimation and discuss your results. Is this a good model? What do the coefficients on the explanatory variables mean and which explanatory variables are important in explaining mortgage rates? Use any level of significance you believe is appropriate in your discussion. What is the multiple regression equation and the goodness of fit measure?
From your work in question 1, eliminate all the explanatory variables that are not statistically important. What is the equation of your new regression model? Discuss the coefficients and the goodness of fit for the new model.