# solution

Consider the following regression output:YË†i = 0.2033 + 0.6560 Xtse = (0.0976) (0.1961)r2 = 0.397 RSS = 0.0544 ESS = 0.0358where Y = labor force participation rate (LFPR) of women in 1972 and X = LFPR of women in1968. The regression results were obtained from a sample of 19 cities in the United States.(a) How do you interpret this regression?(b) Test the hypothesis: H0 : ÃŸ1 = 1 against H1 : ÃŸ1 > 1. Which test do you use? And why?What are the underlying assumptions of the test(s) you use?(c) Suppose that the LFPR in 1968 was 0.58 (or 58%). On the basis of the regression resultsgiven above, what is the mean LFPR in 1972? Establish a 95 percent confidence interval forthe mean prediction.(d) How would you test the hypothesis that the error term in the population regression isnormally distributed? Show the necessary calculations.

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