National open university of nigeria introduction to econometrics I eco 355

6.0 
TUTOR MARKED ASSESSMENT EXERCISE 
Discuss the term ―Confidence interval‖. 
7.0 
REFERENCES/FURTHER READINGS 
 
Gujarat, D. N. (2007) Basic Econometrics, 4
th
Edition, tata Mcgraw – Hill publishing 
company limited, New Delhi. 
Hall, S. G., & Asterion, D. (2011) Applied Econometrics, 2
nd
Edition, Palgrave 
Macmillian, New York city, USA. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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UNIT FIVE: HYPOTHESIS TESTING 
 
CONTENTS 
 
1.0 Introduction 
2.0 Objectives 
3.0 Main content 
3.1.
Analysis of Hypothesis 
3.2.
Hypothesis testing: the confidence interval Approach 
3.3.
Hypothesis testing: the test-of-significance Approach 
3.4.
Testing the significance of 
: the Chi Square (
Test 
4.0 
Conclusion 
5.0 
Summary 
3.0
Tutor-Marked Assignment 
7.0. References
 
 
 
1.0.
 
INTRODUCTION 
A hypothesis test is a statistical test that is used to determine whether there is enough 
evidence in a sample of data to infer that a certain condition is true for the entire 
population. A hypothesis test examines two opposing hypotheses about a population: the 
null hypothesis and the alternative hypothesis. The null hypothesis is the statement being 
tested. Usually the null hypothesis is a statement of "no effect" or "no difference". The 
alternative hypothesis is the statement you want to be able to conclude is true. 

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Based on the sample data, the test determines whether to reject the null hypothesis. You 
use a p-value, to make the determination. If the p-value is less than or equal to the level 
of significance, which is a cut-off point that you define, then you can reject the null 
hypothesis.