What are the underlying assumptions of the test you use

Reference no: EM131103788

Consider the following regression output†:

Yˆi = 0.2033 + 0.6560Xt
se = (0.0976) (0.1961)
r2 = 0.397 RSS = 0.0544 ESS = 0.0358
where Y= labor force participation rate (LFPR) of women in 1972 and X= LFPR of women in 1968. The regression results were obtained from a sample of 19 cities in the United States.

a. How do you interpret this regression?

b. Test the hypothesis: H0 : ß2 = 1 against H1 : ß2 >1. Which test do you use? And why? What are the underlying assumptions of the test(s) you use?

c. Suppose that the LFPR in 1968 was 0.58 (or 58 percent). On the basis of the regression results given above, what is the mean LFPR in 1972? Establish a 95% con?dence interval for the mean prediction.

d. How would you test the hypothesis that the error term in the popula- tion regression is normally distribute? Show the necessary calculations.

Reference no: EM131103788

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