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.

Expert Solution

orchestra answered 2 years ago

Assuming that there is no long-run relationship between the inflation rate and unemployment. If this is...

Assuming that there is no long-run relationship between the inflation rate and unemployment. If this is true, then why is it that people pay such close attention to every move made by the Fed?

An economist was interested in studying the relationship between the way families spend tax refunds and...

An economist was interested in studying the relationship between the way families spend tax refunds and the size of their incomes. He took a sample of 6 families and looked at their annual family income and the percentage of the tax refund spent within three months of receipt. The results are below. Family Income ($1000s) Percentage of Refund Spent (%) 23 45 52 55 16 100 45 50 64 15 34 20 The sample covariance between the annual family income...

The following data was collected during a study to determine if there is a relationship between...

The following data was collected during a study to determine if there is a relationship between the vertical drop of the mountain and the number of trails at the resort in New York State. (1200, 30), (700, 50), (700, 24), (1500, 62), (1010, 23), (3350, 67), (400, 15), (1600, 34) a.) Generate the regression equation. b.) Determine the correlation coefficient. c.) Is there enough evidence to conclude that the slope of the regression line is not zero at the 98%...

Explain the following : Short run tradeoff (negative relationship) between unemployment & inflation. policy is not...

Explain the following : Short run tradeoff (negative relationship) between unemployment & inflation. policy is not efficient in the LR. Money supply curve is vertical. Expenditure multiplier + Tax multiplier = 1.

What are the reasons for an observed relationship between inflation and unemployment in the long run...

What are the reasons for an observed relationship between inflation and unemployment in the long run having a upward sloping line instead of a vertical line as in the long run Philip's curve ?

Is there a relationship between handedness and gender? A researcher collected the following data in hopes...

Is there a relationship between handedness and gender? A researcher collected the following data in hopes of discovering if handedness and gender are independent (Ambidextrous individuals were excluded from the study). Use the Chi-Square test for independence to explore this at a level of significance of 0.05. Left-Handed Right-Handed Men 13 22 Women 27 18

3. The following data represents data collected by a social researcher to examine the relationship between...

3. The following data represents data collected by a social researcher to examine the relationship between “HAPPINESS” and “INCOME PER YEAR for workers 30 to 40 years old living on Long Island, NY. Each worker completed a personality inventory scale that yields an HAPPINESS LEVEL Scale Value(1 is LOW and 5 HIGH) and reported their respective yearly INCOME. HAPPINESS LEVEL 3 1 3 4 3 2 5 1 3 4 2 4 5 3 4 5 4 4 5 2...

The relationship between inflation and unemployment is given by π = π$ − 3(u − 0.06)....

The relationship between inflation and unemployment is given by π = π$ − 3(u − 0.06). (a) What is the value of the natural rate of unemployment? (b) If actual inflation is 0.02 and expected inflation is 0.05, what is the unemployment rate? (c) If an aggregate demand shock (resulting from increased exports of goods) raises the inflation rate to 0.08 (the natural rate of unemployment and the expected inflation rate are not affected). What is the numerical value of...

Present a thorough analysis of the inverse relationship between inflation and unemployment reflected by the Phillips...

Present a thorough analysis of the inverse relationship between inflation and unemployment reflected by the Phillips curve. Describe the importance of expectations and how they affect the actual relationship between the inflation rate and the unemployment rate.

a) Explain the relationship between unemployment and inflation using the concept of Philips curve. What are...

a) Explain the relationship between unemployment and inflation using the concept of Philips curve. What are the critics on Philips Curve? b) Use the Phillips Curve to explain policy responses to a supply shock caused by increase in the world price of oil c) Discuss Walras's Law statement that the sum of the nominal excess demands for all goods in the economy must be zero.

Question