Using 143 observations,assume that you had estimated a simple regression function and that your estimate for the slope was 0.04,with a standard error of 0.01.You want to test whether or not the estimate is statistically significant.Which of the following possible decisions is the only correct one:
A)you decide that the coefficient is small and hence most likely is zero in the population
B)the slope is statistically significant since it is four standard errors away from zero
C)the response of Y given a change in X must be economically important since it is statistically significant
D)since the slope is very small,so must be the regression R2.

Question

Quizplus · Accepted Answer

To test for the statistical significance of the slope, we calculate the t-statistic as the estimated slope divided by its standard error. In this case, the t-statistic is (0.04/0.01) = 4. This means that the estimated slope is four standard errors away from zero, which is a commonly used threshold for statistical significance. Therefore, we would reject the null hypothesis that the true slope is zero and conclude that the estimate is statistically significant. The other answer choices are not valid interpretations of the statistical test.

Using 143 Observations,assume That You Had Estimated a Simple Regression