The following are worth 2 points each. On the basis of 15 observations, you foun

Question

The following are worth 2 points each. On the basis of 15 observations, you found a correlation coefficient between the inflation rate change (via the CPI) and your salary change to be 0.65. If you are to test the significance of this correlation coefficient, you would use a/an ______and conclude that there is a/an relationship between the inflation rate change and your salary change at a 5% significance level. Z-statistic, significant Z-statistic, insignificant t-statistic, significant t-statistic, insignificant F-statistic, significant If the slope coefficient is found to be 5 in a simple regression equation and its standard error to be 3 on the basis of 10 observations, the 95% confidence interval for this slope coefficient lies between_____ and ________. -1; 11 1.918: 11.918 -0.5785: 10.5785 -0.4375; 10.4375 0: 12

Explanation / Answer

1) For the observations less than 30, we use T test

Also since we use 90%or 95% siignificant level, the correlation with 0.65 has a lot of significance difference between 0.95 correlation and 0.65 correlation.

Hence T test, significant

2) We have mean = 5

standard error = s/sqrt(n) = 3

at 95% CI. t value = 1.812

hence confidencce interval is

mean + T value * standard error = 5+ 1.812 * 3 = 10.4375

mean - T value * standard error = 5- 1.812 * 3 = -0.4375

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