question 3

Question 3 [5 marks] Based on the data for years 1962 to 1977 for the United States, economists obtained the following demand function for automobiles: Y (hat) = 5807 + 3.24X; 12 = 0.22 se (1.634) where Y = retail sales of passenger cars (thousands) and X = the real disposable income (millions dollars). Note: The se for by is not given. i) Interpret the estimated intercept and slop (1 mark) ii) How would you interpret r'? (0.5 mark) iii) Establish a 95% confidence interval for By. (1 mark) iv) Compute the / value under Ho:By = 0. Is it statistically significant at the 5 precent level? Which f test do you use, one tailed or two-tailed, and why? (2.5 marks)