An economist is studying the relationship between unemployment and inflation, and has collected the following data....

An economist is studying the relationship between unemployment and inflation, and has collected the following data. Inflation appears in columns, unemployment in rows (this question is worth 5 marks).

Unemployment Abated InflationUnchanged Accelerated Total

Lower 5 5 10 20

Unchanged 5 35 20 60

Higher 20 0 0 20

Total 30 40 30 100

The data in the table above summarize the relationship between unemployment and inflation based on 100 months of data. For instance, for 35 months, inflation and unemployment were unchanged, while for 10 months inflation had accelerated and unemployment was lower.

Using the data in the table above, conduct an appropriate hypothesis test of independence between inflation and unemployment at the 5% level of significance.

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orchestra answered 1 year ago

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