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Suppose we estimate the following regression yt= + xt+ ut. The output of the regresion is follows: = 0.03, SE( ) = 0.02, = 0.9,

Suppose we estimate the following regression yt= + xt+ ut. The output of the regresion is follows: = 0.03, SE( ) = 0.02, = 0.9, SE( ) = 0.04, and T = 120. (a) Using a two tailed t-test, at the 5% level of significance, test the hypothesis = 0. Report the 95% confidence interval for . (b) Using a two tailed t-test, at the 5% level of significance, test the hypothesis = 1. Report the 95% confidence interval for .

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