In conjunction with the housing foreclosure crisis of 2009, many economists expr

Question

In conjunction with the housing foreclosure crisis of 2009, many economists expressed increasing concern about the level of credit card debt and efforts of banks to raise interest rates on these cards. The banks claimed the increases were justified. A Senate subcommittee decided to determine if the average credit card balance depends on the type of credit card used. Under consideration are Visa, MasterCard, Discover, and American Express. The sample sizes to be used for each level are 25, 25, 26, and 23, respectively.

State the number of degrees of freedom available for determining the between-samples variation.

A) 6

B) 5

C) 2

D) 3

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Explanation / Answer

As there are 4 types of Credit Cards given, we test the variation across these 4 types with degrees of freedom:

4-1 = 3

Answer: D. 3

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