Question: 6.16 Reconsider the presidential voting data (fair.dat) introduced in Exercise 2.14 and used again in Exercise 5.11 to estimate the regression model VOTE = BI

6.16" Reconsider the presidential voting data (fair.dat) introduced in Exercise 2.14 and used again in Exercise 5.11 to estimate the regression model VOTE = BI + B2GROWTH + B, INFLATION + e In order to get reelected. President Willie B. Great believes it is worth sacrificing some inflation as long as more growth is achieved.

(a) Test the hypothesis that a 1% increase in both GROWTH and INFLATION will leave VOTE unchanged against the alternative that VOTE will increase.

(b) Test the hypothesis that Willie will not get reelected against the alternative that he will get reelected when the growth rate is 4% and the inflation rate is 5%
(Carry out the test in terms of the expected vote E(VOTE) and use a 54 significance level.)

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