To investigate whether economic events influence presidential elections, draw a scatter diagram and estimate the equation Y = α + βX + ε using the Table 8.13 data on X, the change in the unemployment rate during a presidential election year, and Y, the percentage of the vote for major party presidential candidates received by the incumbent party.

a. Does the estimated coefficient of X have a plausible sign and magnitude?

b. Test at the 5 percent level the null hypothesis that β = 0.

c. Does the intercept have a plausible magnitude?

d. Test at the 5 percent level the null hypothesis that α = 50.

e. How close is the predicted value of Y in 2008, when X = 1.2, to the actual value, Y = 46.3?

Transcribed Image Text:

X Y X Y X Y 1900 -1.5 53.2 1936 -3.2 62.5 1972 -0.3 61.8 1904 1.5 60.0 1940 -2.6 55.0 1976 -0.8 48.9 1908 5.2 54.5 1944 -0.7 53.8 1980 1.3 44.7 1912 -2.1 54.7 1948 -0.1 52.4 1984 -2.1 59.2 1916 -3.4 51.7 1952 -0.3 44.6 1988 -0.7 53.9 1920 3.8 36.1 1956 -0.3 57.8 1992 0.7 37.7 1924 2.6 54.4 1960 0.0 49.9 1996 -0.2 54.7 1928 0.9 58.8 1964 -0.5 61.3 2000 -0.3 50.3 1932 7.7 40.9 1968 -0.2 49.6 2004 -0.5 51.2