Assume That the Two-Sided 95% Confidence Interval for the Effect

question 5

Multiple Choice

Assume that the two-sided 95% confidence interval for the effect of a price on amount of beef purchased is between 0.30 and 0.38. Which of the following statements is incorrect?

• A) We will reject the null hypothesis that this coefficient equals zero.
• B) There is less than a 2.5% chance that a coefficient higher than 0.38 would produce the coefficient we actually observe.
• C) There is a 95% chance that the true coefficient is between 0.30 and 0.38.
• D) There is a 95% chance that a random sample will produce a confidence interval that includes the true coefficient.

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Definitions:

Nominal Interest Rate

The nominal interest rate, which reflects the raw rate of interest prior to being adjusted for inflation and represents the apparent value of financial dealings.

Market Basket

A selection of goods and services used to track price changes and inflation in an economy, representing the typical purchases made by consumers.

CPI

The Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, used as an indicator of inflation.

Market Basket

A selected set of goods and services used to track inflation and the cost of living or to define a beneficiary's set of consumable products.