(See Solution) John S. Mill recently received a research-oriented master’s - #80060
- John S. Mill recently received a research-oriented master’s degree in economics and for the last 18 months has been working with the Central Intelligence Agency as an economic analyst. His current project is to search for identifying characteristics which might serve as predictors of future political turmoil within a foreign country. Once those factors have been isolated, countries exhibiting such tendencies will be targeted for further study and analysis.
John’s economics background has taught him that nations with high unemployment and other unfavorable economic conditions are often more likely to suffer political unrest. The Data Analysis Division of the CIA provides John with unemployment figures and inflation rates for several countries in four areas worldwide. These values are shown in the following table.
|
|
Middle East |
Eastern Europe |
Far East |
Central America | ||||
| Country |
Unemployment |
Inflation |
Unemployment |
Inflation |
Unemployment |
Inflation |
Unemployment |
Inflation |
| 1 |
17.5 |
20.2 |
10.2 |
8.2 |
18.1 |
9.7 |
27.8 |
50.2 |
| 2 |
16.1 |
10.2 |
8.4 |
7.3 |
30.2 |
17.5 |
39.7 |
40.3 |
| 3 |
12.5 |
8.7 |
7.2 |
6.3 |
25.3 |
21.2 |
37.8 |
47.3 |
| 4 |
15.2 |
17.1 |
7.5 |
5.3 |
19.7 |
10.2 |
42.1 |
80.7 |
| 5 |
22.3 |
18.7 |
9.2 |
6.1 |
21.3 |
- |
37.0 |
38.9 |
|
6 |
18.3 |
23.7 |
10.7 |
- |
22.0 |
- |
48.0 |
73.1 |
|
7 |
19.2 |
- |
17.1 |
- |
24.1 |
- |
38.7 |
63.2 |
The agency has budgeted $1.7 million for the acquisition of additional intelligence-gathering equipment over the next several months. John must prepare a report indicating roughly how these funds should be allocated. How can John use these data in the decision-making process regarding proper allocation of the money? John’s superiors have warned him that, at all costs, he must avoid rejecting the hypothesis of no significant differences in these countries if indeed none exists. Why would John’s superiors give him such a warning? What are the consequences of Type I and Type II errors?
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