During the Covid crisis, there were lockdowns and working-from-home, which made collecting data on unemployment more challenging. Researchers from Heriot Watt University conducted a survey of 1,000 individuals in the labour force to assess rise in unemployment in September 2020. The object was to find out whether the unemployment rate had risen above a benchmark proportion of 5 per cent of the labour force in Scotland. Of the surveyed persons, 60 reported being unemployed in the week prior to the survey. (i) Conduct a two-tailed test of whether unemployment rate during this period was 5 per cent. Set out your null and alternative hypotheses, significance level, test statistic, assumptions and sampling distribution clearly. Conduct the test and comment on the economic significance of the findings. (ii) Now conduct a one-tailed test of whether unemployment rate during this period exceeded 5 per cent. Set out your null and alternative hypotheses, significance level, test statistic, assumptions and sampling distribution clearly. Conduct the test. Are the findings of the two tests consistent? Discuss the economic significance of the findings
During the Covid crisis, there were lockdowns and working-from-home, which
made collecting data on unemployment more challenging. Researchers from
Heriot Watt University conducted a survey of 1,000 individuals in the labour force
to assess rise in unemployment in September 2020. The object was to find out
whether the unemployment rate had risen above a benchmark proportion of 5
per cent of the labour force in Scotland. Of the surveyed persons, 60 reported
being unemployed in the week prior to the survey.
(i) Conduct a two-tailed test of whether unemployment rate during this period
was 5 per cent. Set out your null and alternative hypotheses, significance
level, test statistic, assumptions and sampling distribution clearly. Conduct
the test and comment on the economic significance of the findings.
(ii) Now conduct a one-tailed test of whether unemployment rate during this
period exceeded 5 per cent. Set out your null and alternative hypotheses,
significance level, test statistic, assumptions and sampling distribution
clearly. Conduct the test. Are the findings of the two tests consistent?
Discuss the economic significance of the findings
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