Suppose you are interested in examining the effect of π₯ on π¦.
The sample covers the period of π‘ = 1, 2, 3, β¦ , π.
a) Suggest a research question and write the linear regression model that you would estimate. Define the variables. (30%)
b) State a hypothesis that you can test for the slope coefficient. Explain all the steps and assumptions. (20%)
c) Explain, in your own words, what you understand about using historical data for predictions. Relate your answer to the research question and model in (a). (30%)
d) What is a Type I error? How is it related to the level of significance? Use the information in (c) to explain. (20%)
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