Question

A national interest rate on houses for 25 years is 4.3%. A banker in a large northwestern city believes that the local interest rates are lower than the national rate. What is the null hypothesis that this banker wishes to test?

Answer 1

The national interest rate on houses for 25 years is 4.3%. The banker wishes to test that the local interest rates are lower than the national rate. So he should use the initial data of 4.3% interest as his base data. Then he should investigate the rates of houses in the local vicinities and compare it to his base data.