Students Who Graduated from College in Last Year with Student

Essay

Students who graduated from college in last year with student loans owed an average of $25,250 (The New York Times, November 2). An economist wants to determine if the average debt has increased since last year. She takes a sample of 40 recent graduates and finds that their average debt was $28,275. Assume that the population standard deviation is $7,250.
A) Specify the competing hypotheses to determine whether the average undergraduate debt has increased since last year.
B) Calculate the value of the test statistic and the p-value.
C) At the 5% significance level, can you conclude that the average undergraduate debt has increased? Explain.