Question

Wall Street traders are anxiously waiting for the federal government’s release of the February numbers for nonfarm payrolls. Last year month of February showed an average of 250,000 new jobs with a standard deviation of 60,000. A sample of 100 nonfarm payrolls taken earlier in the week shows a sample mean of 243,000. Financial analysts often call such a sample mean the “whisper number”. Conduct a hypothesis test to determine whether the whisper number justifies a conclusion of a statistically significant change in the number of new jobs with respect to last year. Allow for 5% error in the test. The hypothesis setting for the test follows.

H_{0 :} µ = 250,000

H_a : µ ≠ 250,000

1. Conduct hypothesis test using a critical-value approach.
2. Conduct a hypothesis test using a p-value approach with 99% confidence.
3. According to the statistical analysis you have performed above, do you think the whisper number does justify a conclusion of a statistically significant change in the number of new jobs? WHY?

Answer 1