RM chap4.docx

# 4433 significant relationship between inflation and

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4.4.3.3 Significant relationship between inflation and unemployment rate. Significance level=1% Let β 3 =Unemployment rate 1. H 0 : β 3 =0 H 1 : β 3 ≠0 2. Significant level: α=1% 3. Critical value: t α/2,n-k-1 = t 0.01/2,30-4-1= ±2.787 4. Decision rule: Reject H 0 if test statistic is larger than the upper critical value or smaller than lower critical value. Otherwise, do not reject H 0. 5. Test statistic: t= -2.0851 6. Decision: Reject H 0. The test statistic (-2.0851) is larger than the lower critical value (-2.787). 7. Conclusion: We have enough evidence to conclude that β 3 ≠0. Unemployment rate is significantly related to inflation. Significance level=5% Let β 3 =Unemployment rate 1. H 0 : β 3 =0

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H 1 : β 3 ≠0 2. Significant level: α=5% 3. Critical value: t α/2,n-k-1 = t 0.05/2,30-4-1= ±2.060 4. Decision rule: Reject H 0 if test statistic is larger than the upper critical value or smaller than lower critical value. Otherwise, do not reject H 0. 5. Test statistic: t= -2.0851 6. Decision: Reject H 0. The test statistic (-2.0851) is smaller than the lower critical value (- 2.060). 7. Conclusion: We have enough evidence to conclude that β 3 ≠0. Unemployment rate is significantly related to inflation. Significance level=10% Let β 3 =Unemployment rate 1. H 0 : β 3 =0 H 1 : β 3 ≠0 2. Significant level: α=10% 3. Critical value: t α/2,n-k-1 = t 0.10/2,30-4-1= ±1.708 4. Decision rule: Reject H 0 if test statistic is larger than the upper critical value or smaller than lower critical value. Otherwise, do not reject H 0. 5. Test statistic: t= -2.0851 6. Decision: Reject H 0. The test statistic (-2.0851) is smaller than the lower critical value (- 1.708). 7. Conclusion: We have enough evidence to conclude that β 3 ≠0. Unemployment rate is significantly related to inflation. 4.4.3.4 Significant relationship between inflation and interest rate. Significance level=1% Let β 4 =Interest rate 1. H 0 : β 4 =0 H 1 : β 4 ≠0 2. Significant level: α=1% 3. Critical value: t α/2,n-k-1 = t 0.01/2,30-4-1= ±2.787
4. Decision rule: Reject H 0

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• Summer '17
• ms lau
• Inflation, 1%, 4.4.3.2, 4.4.3.1, 4.4.3.3, 4.4.3.4

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