Consider a regression in which b₂ = -1.5 and the standard error of this coefficient equals 0.3.To determine whether X₂ is a significant explanatory variable,you would compute an observed t-value of -5.0.

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To determine if X₂ is a significant explanatory variable, we need to compute the t-value using the formula: t = (coefficient estimate - null hypothesis value) / standard error. In this case, the null hypothesis is that the coefficient estimate is 0, and the observed t-value is 5.0. A standard error of 0.3 suggests that the coefficient estimate is reliable, and the t-value of 5.0 indicates that the coefficient estimate is significantly different from 0, therefore X₂ is a significant explanatory variable.

Consider a Regression in Which B2 = -1

Consider a Regression in Which B₂ = -1