Question

A sample of different countries is selected to determine is there a significant difference between trade freedom index and financial freedom index. Use α=0.01 and the following data to test the hypothesis.

a) Set up the null and alternative hypotheses for testing whether there is a difference between trade freedom and financial freedom.

b)Given the hypotheses in (a) would you reject null-hypothesis?(Note the significance level of 1%). Please provide the explanation why do you reject or do not reject your hypothesis.

c)You would like to reject null hypothesis at α=0.05 level of significance, what is your conclusion? Why?

d)What could be the highest confidence of conclusion that there is a statistically significant difference between trade freedom and financial freedom?

Country Name	Trade Freedom	Financial Freedom
Argentina	69.2	60
Armenia	80.6	70
Australia	88.2	90
Austria	86.4	70
Belgium	86.4	70
Bosnia and Herzegovina	80	60
Botswana	82.8	70
Brazil	67.8	50
Canada	87	80
Côte d'Ivoire	69.4	50
Croatia	86.4	60
Cuba	65.6	10
Cyprus	86.4	60
Czech Republic	86.4	80
Denmark	86.4	80
Estonia	86.4	70
Finland	86.4	80
France	81.4	70
Germany	86.4	70
Greece	81.4	50
Hungary	86.4	70
Iceland	86.8	70
India	73.4	40
Indonesia	80.8	60
Ireland	86.4	70
Israel	86.2	70
Italy	86.4	50
Japan	80	60

Please answer in excel not in handwriting, I thumbs up!

Answer 1

Answer:

Excel Steps:

Test for equality of variances.

1. Go to Data - Data Analysis - F-Test for two sample variances

2. Enter the Trade Freedom in Variable 1 and Financial Freedom in Variable Two.

3. Click on Labels if selected variable range includes column names.

4. Enter Output Range for Current Sheet. - Ok

Test for equality of means.

1. Go to Data - Data Analysis - t-test for : Two Samples assuming unequal variance

2. Enter the Trade Freedom in Variable 1 and Financial Freedom in Variable Two.

3. Click on Labels if selected variable range includes column names.

4. Enter Output Range for Current Sheet. - Ok