Based on the data for the years 1962 to 1977 for the United States, Dale Bails and Larry Peppers obtained the following demand function for automobiles:
Ŷt = 5807 + 3.24Xt r2 = 0.22
se = (1.634)
where Y = retail sales of passenger cars (thousands) and X = the real disposable income (billions of 1972 dollars). These for b1 is not given.
a. Establish a 95% confidence interval for B2.
b. Test the hypothesis that this interval includes B2 = 0. If not, would you accept this null hypothesis?
c. Compute the t value under H0:B2 = 0. Is it statistically significant at the 5 percent level? Which t test do you use, one-tailed or two-tailed, and why?