Chapter 05 - Hypothesis Testing in Linear Regression Analysis

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CHAPTER 5
Multiple Choice Questions

1. If we find that it is unlikely to observe the sample statistic that is actually observed if the null
hypothesis is true, then we should
a) fail to reject the null hypothesis.
b) reject the null hypothesis.
c) reject the alternative hypothesis.
d) calculate a new sample statistic.

2. A sampling distribution is
a) the distribution of a parameter.
b) the distribution of a statistic.
c) the standard deviation of a statistic.
d) the standard deviation of the estimated slope coefficient

3. A confidence interval is constructed

a) to bracket the sample mean.
b) to bracket the sample statistic.
c) to bracket the population parameter.
d) to bracket the margin of error.

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Chapter 05 - Hypothesis Testing in Linear Regression Analysis

4. A standard error is
a) the variance of the sampling distribution.
b) the standard deviation of the population distribution.
c) the standard deviation of the sampling distribution
d) the variance of the population distribution.

5. An estimator is unbiased if
a) the standard error is small.
b) the expected value of the estimator is equal to the true population parameter.
c) the 𝑝-value is less than . 05.
d) the expected value of the estimator is equal to the sample statistic.

6. An estimator is efficient if it
a) has the smallest variance of all unbiased estimators.
b) has a 𝑝-value is less than . 05.
c) has a small standard error.
d) has the smallest mean squared error.

7. The confidence interval method for hypothesis testing (at the 95% level) relies on the fact that
a) 95 percent of all sample statistics are correct.
b) the observed sample statistic is correct 95 percent of the time.
c) there is a 95 percent chance that the calculated confidence interval contains the true value
of the unobserved population parameter
d) 95 percent of all confidence intervals that could be constructed contain the true value of
the unobserved population parameter.

8. When using the confidence interval method for hypothesis testing, if the calculated confidence
interval does not contain the value of the null hypothesis, then you should
a) reject the null hypothesis.
b) fail to reject the null hypothesis.
c) reject the alternative hypothesis.
d) calculate a new confidence interval that does contain the value of the null hypothesis.

9. The critical value method for hypothesis testing relies on the fact that
a) if the null hypothesis is false, then it is very unlikely to observe a test statistic more
extreme than the critical value.
b) if the null hypothesis is true, then it is very unlikely to observe a test statistic more extreme
than the critical value.
c) if the null hypothesis is true, then it is very likely to observe a test statistic more extreme
than the critical value.
d) if the alternative hypothesis is false, then it is very unlikely to observe a test statistic more
extreme than the critical value.

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Chapter 05 - Hypothesis Testing in Linear Regression Analysis

10. When using the critical value method for hypothesis testing, if the value of the test statistic is
less than the critical value, then you should
a) reject the null hypothesis.
b) fail to reject the null hypothesis.
c) choose a smaller critical value that is less than the test statistic.
d) calculate a new test statistic that exceeds the critical value.

11. The 𝑝-value method for hypothesis testing relies on the fact that
a) if the null hypothesis is false, then it is very unlikely to observe a 𝑝-value smaller than
the chosen significance level.
b) if the null hypothesis is true, then it is very unlikely to observe a 𝑝-value larger than the
chosen significance level.
c) if the null hypothesis is true, then it is very unlikely to observe a 𝑝-value smaller than the
chosen significance level.
d) if the alternative hypothesis is true, then it is very unlikely to observe a 𝑝-value smaller
than the chosen significance level.

12. When using the 𝑝-value method for hypothesis testing, if the calculated 𝑝-value is smaller
than the chosen significance level, then you should
a) reject the null hypothesis.
b) fail to reject the null hypothesis.
c) choose a smaller significance level that is less than the 𝑝-value.
d) calculate a new 𝑝-value that is larger than the chosen significance level.

13. The 𝐹-statistic for the overall significance of the estimated sample regression function is
a) the ratio of the MSExplained to the MSUnexplained.
b) the ratio of the MSUnexplained to the MSExplained.
c) the standard error of the estimated sample regression function.
d) the adjusted R-square.

14. The logic behind the 𝐹-test for the overall significance of the estimated sample regression
function is that if the estimated sample regression function explains a significant amount of
the variation in the dependent variable, then
a) the regression 𝐹-statistic should be small.
b) the MSUnexplained should be large relative to the MSExplained
c) the MSExplained should be large relative to the MSUnexplained
d) total sum of squares should be large.

15. The 𝑡-statistic for the individual significance of the estimated slope coefficient 𝛽̂1 is
a) the standard error of the estimated slope coefficient.
b) the estimated slope coefficient.

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Chapter 05 - Hypothesis Testing in Linear Regression Analysis

c) the ratio of the estimated slope coefficient to the standard error of the estimated slope
coefficient.
d) the ratio of the estimated slope coefficient to the variance of the estimated slope
coefficient.

16. The logic behind the 𝑡-test for the individual significance of the estimated slope coefficient
𝛽̂1 is that if the estimated slope coefficient is likely to be different from 0, then
a) the estimated slope coefficient should be large.
b) the estimated standard error should be large.
c) the ratio of the estimated slope coefficient to the standard error of the estimated slope
coefficient should be small.
d) the ratio of the estimated slope coefficient to the standard error of the estimated slope
coefficient should be large.

Suppose you regress U.S. annual real GDP ($billions) on U.S. annual real defense
expenditures ($millions) and that you get the following results.

Figure 5.1

17. Based on the Excel output in Figure 5.1, you should conclude that
a) the estimated intercept is statistically significant.
b) the estimated intercept is not statistically significant.
c) the estimated slope coefficient is not statistically significant.

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Chapter 05 - Hypothesis Testing in Linear Regression Analysis

d) the estimated sample regression function is not statistically significant.

18. Based on the Excel output in Figure 5.1, you should conclude that a
a) $1 million increase in real defense expenditures is estimated to be associated with a
statistically significant $1,273.29 billion increase in real GDP, holding all else constant.
b) real GDP is estimated to be a statistically significant $1,273.29 billion when real defense
expenditures are 0, holding all else constant.
c) $1 million increase in real defense expenditures is estimated to be associated with a
statistically insignificant $13.659 million increase in real GDP, holding all else constant
d) a $1 million increase in real defense expenditures is estimated to be associated with a
statistically significant $13.659 million increase in real GDP, holding all else constant.

19. Based on the Excel output in Figure 5.1, you should conclude that the estimated sample
regression function is
a) statistically significant because 2.39636𝐸 − 06 < .05.
b) statistically significant because 26.403 > .05.
c) statistically insignificant because 2.39636𝐸 − 06 < .05
d) statistically insignificant because 26.403 > .05

20. Based on the Excel output in Figure 5.1, you should conclude that the estimated slope
coefficient is
a) statistically insignificant because the 95% confidence interval contains the estimated
slope coefficient.
b) statistically insignificant because 5.138 > .05.
c) statistically insignificant because 2.39636𝐸 − 06 < .05.
d) statistically significant because 2.39636𝐸 − 06 < .05.

21. Based on the Excel output in Figure 5.1, the appropriate critical value for 95% confidence is
a) 1.96
b) 𝑡.05,70 = 1.67
c) 1.645
d) 𝑡.025,70 = 2.00

Suppose you regress obesity rates for the 50 states and the District of Columbia on the
percentage of adults who have earned a Bachelor’s degree and that you get the following
results.

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