DRQ 8 DR . CAPPS AGEC 317 4 POINTS

①What is the sum of all residuals equal to? (1

point) 0

②How do you interpret these correlation

coefficients?a) -0.001 (1/2 point) a very small

negative correlation or linear association among two variables

b) 0.9 (1/2 point) a very large positive correlation or linear association among two variables

DRQ 8 DR . CAPPS AGEC 317 4 POINTS

①__Principle of Parsimony(definition)___

simple models are generally preferred to

complex models, especially in forecasting (1

point)

②What are two of the four assumptions of a

regression model?a) Constant variance of the error termb) No correlation of the error term at

observations i and jc) No correlation of the error term with any

explanatory variabled) The mean of the error term is equal to 0