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

The correct decision is that the slope is statistically significant since it is four standard errors away from zero. This is determined by dividing the estimated coefficient (0.04) by its standard error (0.01) to get a t-statistic of 4. Therefore, we reject the null hypothesis that the coefficient is zero and conclude that there is evidence of a non-zero relationship between X and Y in the population. The other choices are incorrect or irrelevant to the statistical significance of the slope estimate.

Using 143 Observations, Assume That You Had Estimated a Simple