Figure 5.7 in your textbook shows output from an econometric software program called EViews that is estimating the relationship between household income and food expenditure. (a) Construct a 95% confidence interval for b2. Show all your work. (b) Test the null hypothesis that there is no relationship between household income and food expenditure, against the alternative hypothesis that there is a relationship. Be sure to do all parts of the hypothesis test. (c) Test the null hypothesis that there is no relationship between household income and food expenditure, against the alternative hypothesis that there is a positive relationship. Be sure to do all parts of the hypothesis test. (d) Which of the above two approaches makes more sense to you as an economist - the alternative hypothesis (and associated rejection region) in part (b), or the alternative hypothesis (and associated rejection region) in part (c)? Why?

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