Suppose your supervisor has asked you to fit a simple first-order multiple linea
ID: 3222230 • Letter: S
Question
Suppose your supervisor has asked you to fit a simple first-order multiple linear regression model relating the amount of money consumers report spending on gifts during the holiday season (i.e., Y) to the x variables age, gender, marital status, and monthly income.
You fit the model and obtain an R2 value of 0.746.
Your supervisor tells you to add one more variable to the model, holiday spending the previous year. Nothing else is changed about the fitted model.
Which of the following values could not be the value of R2 after fitting the model with the additional variable?
0.92
0.99
0.815
0.732
0.78
Explanation / Answer
After fitting the model with additional variable, R2 can't be less than the R2 in case of one variable i.e. 0.746. It can either be equal or greater than 0.746. There is only one option having value less than 0.746 which is 0.732. So, this value is not possible.
Option D is correct.
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