The following data refers to the demand for money (M) and the rate of interest (R) in for eight different economics: M (In billions) 56 50 46 30 20 35 37 61 R% 6.3 4.6 5.1 7.3 8.9 5.3 6.7 3.5 a. obtain the OLS estimators of M and R and coefficient of determination for the data and interpret its value b. Test the hypothesis that interest rate influences demand for money and Compute the standard error of the regression coefficients and conduct test of significance at the 5% level of significance. c. If in a 9th economy the rate of interest is R=8.1, predict the demand for money(M) in this economy.
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
The following data refers to the demand for money (M) and the rate of interest (R)
in for eight different economics:
M (In billions) 56 50 46 30 20 35 37 61
R% 6.3 4.6 5.1 7.3 8.9 5.3 6.7 3.5
a. obtain the OLS estimators of M and R and coefficient of determination for the data and interpret its value
b. Test the hypothesis that interest rate influences demand for money and Compute the standard error of the regression coefficients and conduct test of
significance at the 5% level of significance.
c. If in a 9th economy the rate of interest is R=8.1, predict the demand for money(M)
in this economy.
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