Question

7.3.6 The economic dynamism, which is the index of productive growth in dollars for countries that are designated by the World Bank as middle-income are in table #7.3.8 ("SOCR data 2008," 2013). Countries that are considered high-income have a mean economic dynamism of 60.29. Do the data show that the mean economic dynamism of middle-income countries is less than the mean for high-income countries? Test at the 5% level.

Answer 1

Answer:

Here, we have to use one sample t test for the population mean.

H0: µ = 60.29 versus Ha: µ < 60.29

This is a lower tailed test.

The test statistic formula is given as below:

t = (Xbar - µ)/[S/sqrt(n)]

From given data, we have

µ = 60.29

Xbar = 43.87265385

S = 9.071147897

n = 26

df = n – 1 = 25

α = 0.05

Critical value = -1.7081

(by using t-table or excel)

t = (43.87265385 – 60.29)/[ 9.071147897/sqrt(26)]

t = -9.2284

P-value = 0.0000

(by using t-table)

P-value < α = 0.05

So, we reject the null hypothesis

There is sufficient evidence to conclude that the mean economic dynamism of middle-income countries is less than the mean for high-income countries.