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C = 15 + 0.81Yd
(3.1) (18.7)
ons in consumption, our regression estimate can explain 99% variations in consumption)
a)
{ estimated ‘b’/SE (estimated ‘b') } Which follows a t distribution with (n-2) degrees of freedom so we
have
t(n-2) = t = { estimated ‘b’/SE (estimated ‘b') } = 18.7 (given), now at 5% level of significance H 0: b=0 will
be accepted if
t0.025,n-2 = t0.025,17 =2.110 but our given {estimated ‘b’/SE (estimated ‘b') }= 18.7(t ratio) is so high that it
doesn’t lie in the interval [-2.110,2.110]. hence our null hypothesis is rejected and alternative is
accepted and the relation is statistically significant and Y d is statistically significant.
b)
since for estimated ‘a’ , t = { estimated ‘a’/SE (estimated ‘a') } =3.1 (given)