A test of independence is formulated as follows: H0: interest rate and unemploym

Question

A test of independence is formulated as follows:

H0: interest rate and unemployment rate are independent

H1: they are not independent

A large sample of economic data was analyzed, and the p-value was 0.014. At 0.05 level of significance, what is your conclusion?

A.) interest rate and unemployment rate are related

B.) interest rate and unemployment rate are independent

C.) we reject the hypothesis that they are not independent

D.) we cannot make a conclusion with this information

A.) interest rate and unemployment rate are related

B.) interest rate and unemployment rate are independent

C.) we reject the hypothesis that they are not independent

D.) we cannot make a conclusion with this information

Explanation / Answer

Since p - value is less than 0.05, we reject Ho. Hence,

Interest rate and unemployment rate are related

Option A is correct.

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