Page 1 of 13 Economics 310 Menzie D. Chinn Spring 2004 Social Sciencs 7418 University of Wisconsin-Madison Problem Set 2 Answers (corrected Z.3.b, 3/1)Page 2 of 13Page 3 of 13 Problem Z.1Page 4 of 13Page 5 of 13Page 6 of 13 Problem Z.2 Problem Z.3 Correction to Z.3.b: P[x<=6]=0.095 [answer given was for p=0.40, not p=0.60]Page 7 of 13Page 8 of 13Page 9 of 13Page 10 of 13Page 11 of 13Page 12 of 13Page 13 of 13 Z.4 a. Calculate z: z=−=−≈≈003 0030 0018002205454 055......µσ So the probability that z > 0.55 is 0.2912. b. The probability that payroll employment growth is greater than 3% at annual rate for each of the next four quarters is given by: => ×> ×>×>=>==PxPxPxPxPx(.)(.)(.)(.)(.)(. ) .00300300300300302912 0007244 or less than one percent. Note, this answer assumes independence of trials (i.e., in this context, employment growth one quarter is independent of employment growth in another quarter; this is not true in general, so the true probability is likely to be greater than this). zf(z) µ 1 2.550.2088 0.5-0.2088 =
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