You want to test the hypothesis that the prime rate and inflation are independent. The following table is prepared for the test on the basis of the results of a random sample, collected in various countries and various time periods: Using α = .05, what is the critical value of the test statistic that you would use?
A)3.841
B)12.59
C)5.991
D)7.815

Question

You want to test the hypothesis that the prime rate and inflation are independent. The following table is prepared for the test on the basis of the results of a random sample, collected in various countries and various time periods:  Using α = .05, what is the critical value of the test statistic that you would use?
A)3.841 
B)12.59 
C)5.991 
D)7.815

Quizplus · Accepted Answer

The table given in the link represents the chi-squared distribution, which is used for testing independence between two categorical variables. For this test, we need to calculate the test statistic value by comparing the observed frequencies with the expected frequencies. Once we have the test statistic value, we can compare it with the critical value obtained from the chi-squared distribution with (r-1)(c-1) degrees of freedom, where r is the number of rows and c is the number of columns. In this case, r = 2 and c = 2, so the degrees of freedom are (2-1)(2-1) = 1. Using the table, the critical value for α = .05 and 1 degree of freedom is 5.991. Therefore, the correct answer is (C).

You Want to Test the Hypothesis That the Prime Rate