Chapter 15,17,18 test review Flashcards
hypothesis test that compares an observed frequency distribution to an expected frequency distribution on a nominal or ordinal scale.
Goodness of fit test
What are the three characteristics of a chi square distribution
- Always greater than or equal to zero
- It is a family of distributions based on the degrees of freedom
- They are positively squared.
What are two limitations to the chi square test
- If there are two categories with, they need to have an expected frequency of at least 5
- If there are more than two categories, then at least 20% of them need to have a frequency of more than 5
A number that expresses the relative change in price, quantity, or value compared to a base period.
Index number
Name three characteristics of a of an index
- It is a percent, but the percent is typically left off
- They have either a base or a base period their set against
- Most businesses report to the nearest whole number or 10th
Simple index that averages the price of items at different times
Simple average index
Simple index that sums prices of two periods and bases the index on the totals
Simple aggregate index
Weighted index that uses base-period quantities as weights
Laspeyres
Weighted index that uses current period quantities as weights
Paasche Price
Weighted index that uses the geometric mean of Laspeyres and Paasche indexes
Fishers ideal index
Weighted index that measures changes in both prices and quantities involved
Value index
This special index describes the changes in prices from one period to another for a “market basket” of goods and services
Consumer price index
A special index that reflects the prices of over 3400 commodities. It is a Laspeyres type index
Producer price index
What major functions does the CPI perform
- Illustrates erosion of purchasing power
- Works as a yardstick for revising wages, pensions, and other income
- An economic indicator for the rate of inflation
A persons current buying power compared to buying power of the base period of the index
real income