Consider a regression in which b₂ = - 1.5 and the standard error of this coefficient equals 0.3.To determine whether X₂ is a significant explanatory variable,you would compute an observed t-value of - 5.0.

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The t-value can be calculated by dividing the coefficient by its standard error, so t = (-1.5)/0.3 = -5. This observed t-value has a large absolute value, indicating that the coefficient is significantly different from 0 and therefore X₂ is a significant explanatory variable.

Consider a Regression in Which B2 = - 1

Consider a Regression in Which B₂ = - 1