The board of a national central bank is meeting to decide if

The board of a national central bank is meeting to decide if it should reduce interest rates in order to discourage saving State the null and alternative hypotheses regarding saving that the board would formulate to guide its decision. What arc the null and alternative hypotheses? Hq - Increase interest rates in order to discourage saving. H1: Reduce interest rates in order to discourage saving. Hq: No change in interest rates is warranted.H1 : Reduce interest rates in order to discourage saving H0: Reduce interest rates in order to discourage saving. H1 - Increase interest rates in order to discourage saving. H0 : No change in interest rates is warranted. H1 : Change interest rates in order to discourage saving.

Solution

(B) is correct because we take no associative assumptions in null hypothesis. In null hypothesis, we are sceptic about any change. Alternative hypothesis shows our directional assumption or something we want to test.