Question

Determine the appropriate test to be used in the next three exercises.

An economist is deriving a model to predict outcomes on the stock market. He creates a list of expected points on the stock market index for the next two weeks. At the close of each day's trading, he records the actual points on the index. He wants to see how well his model matched what actually happened.

Short answer

The goodness-of-fit test is the best and most relevant test that can be applied here.

Step-by-step solution

Given Information 

Given in the question that An economist is deriving a model to predict outcomes on the stock market. He creates a list of expected points on the stock market index for the next two weeks. At the close of each day's trading, he records the actual points on the index. He wants to see how well his model matched what actually happened. we have to determine the appropriate test to be taken here.

Explanation 

In this scenario, the economist generates a list of expected stock market index points for the next two weeks, as well as the actual points at the end of each trading day. The economist then compares the actual and expected points to ensure that the model he constructed is accurate. As a result, economists can use the goodness-of-fit test in this study.

As a result, the goodness-of-fit test is the best and most relevant test that may be used in this situation.