Twenty Economists Were Sampled and Asked to Predict If the National

question 57

Multiple Choice

Twenty economists were sampled and asked to predict if the national economy would improve during the next 12 months. Eleven of the economists predicted an increase, two economists predicted no change, and seven economists predicted a decrease in the economy. Conduct a hypothesis test at the 0.10 significance level to determine if the majority of economists predict an increase. The correct analysis would be:

• A) a sign test based on the binomial distribution.
• B) a sign test based on the standard normal distribution.
• C) a chi-square test.
• D) a Wilcoxon signed-rank test.

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Definitions:

Extraordinary Gain

A gain resulting from events or transactions that are both unusual in nature and infrequent in occurrence, separated from regular business operations.

Fair Market Value

The price at which an asset would sell in the market under conditions where buyers and sellers are acting freely, informed, and without undue pressure.

Book Value

The net value of a company's assets as listed on the balance sheet, calculated as total assets minus intangible assets (like goodwill) and liabilities.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.