Generation Y’s purchasing decisions. Financial literacy is an important consideration when it comes to the Generation Y making unexpected or impulsive buys. A study in Quantitative Economics and Management Studies (QEMS) (Vol. 1, 2020) analyzed the influence of financial literacy on Generation Y’s impulsive buying behavior of online fashion products. A sample of 142 university students were selected to participate in the study, and each of their responses was used to measure the following two quantitative variables: buying behavior score (y)—where higher scores indicate a tendency to buy online fashion products on impulse; and financial literacy score (x)—where high scores indicate that the student has the high ability to understand and use various financial skills, including personal financial management, budgeting, and investing, before making a purchase decision.

a. Give the equation of a simple linear regression model relating y to x.

b. The researchers theorize that higher financial literacy leads to more responsible online purchasing. Based on this theory, would you expect b0 to be positive or negative (or are you unsure)? Would you expect b1 to be positive or negative (or are you unsure)? Explain.

c. The p-value for testing H0: b1 = 0 versus Ha: b1 6 0 was reported as .031. Use this result to test the researchers’ financial literacy theory at a = .05.