Question

We run a linear regression and the slope estimate is 0.5 with estimated standard error of 0.2. What is the largest value of b for which we would NOT reject the null hypothesis that β1=b ? (assume normal approximation to t distribution, and that we are using the 5% significance level for a two-sided test; need two significant digits of accuracy)

Answer 1

0.9

Explanation:

Y = B0 + B1X

B1 is the slope an from the question the slope estimate is 0.5

S.E= standard error at 0.2

At 5percent Level of significance, the z value for the test is equal to 1.96

We are required to find out the largest value of b for which the null hypothesis would be accepted.

0.5 + 1.96 x 0.2

= 0.892

Approximately 0.9