Short answer questions a . Agree or Disagree (and justify your answer): If the d

Question

Short answer questions

a. Agree or Disagree (and justify your answer): If the distribution of error term u in a population regression model is not normal, then the usual t-statistic is useless.

b. Agree or Disagree (and justify your answer): If you add an independent variable to a multiple regression model and the R2 value rises, this indicates that adding the variable to the model was a good idea.

c. A model to explain the standardized outcome on a final exam (stndfnl) in terms of percentage of classes attended (atndrte) and prior college grade point average (priGPA) is:

Explanation / Answer

a.

Disagree

Although it is assumed that the error term in a regression model is normally distributed, but in reality it is not true many a times. The errors can take and form any distribution without affecting the t-stats.

b.

Agree

Increase in R-squared indicates that a higher %age of data variation is now being explained by the model. Thus, higher the R2, better fit the model.

c.

It indicates a direct and positive relation between the two variables.

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