Discussion:
In June 2001, 38% of fund managers surveyed believed that the core inflation rate would be higher in 1 year. One month later a similar survey revealed that 22% of fund managers epected the core inflation rate to be higher in one year. Assume that the sample size was 200 in both the June and July surveys.
a. Develop a point estimate of the difference between the June and July proportions of fund managers who felt the core inflation rate would be higher in one year.
b. Develop hypotheses such that rejection of the null hypothesis allows us to conclude that inflation expectations diminished between June and July.
c. Conduct a test of the hypotheses in part b using level of significance of -01. What is your conclusion?