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a variable y expressed in thousands of Euros). Data from the table below was collected over a Tu-
month period.
150
340
310
210
Turnover
Advertising
spending.
220 280 250
2.6 2.6 2.4
170
1.5
180 190
1.9
0.9
3.0
2.7
2.3
1.7
1) Compute Pearson's coefficient of correlation between the two variables. Interpret the result.
2) Compute Spearman's coefficient of correlation between the two variables. Show the intermediate
steps used to compute the coefficient. Interpret the result.
Exercise 3:
Use the dataset "Growth", available at https://www.princeton.edu/~mwatson/Stock-Watson 4E/Stock-
Watson-Resources-4e.html .Estimate the linear regression model:
growth = Bo + B₁+ yearsschool + e
I
Test at a 5% significance level if yearsschool is a statistically significant variable for explaining
growth
