When Testing for the Presence of Positive Autocorrelation and the Durbin-

question 99

Multiple Choice

When testing for the presence of positive autocorrelation and the Durbin- Watson statistic is less than the lower critical value, which one of the following statements is true?

• A)We reject the null hypothesis and conclude that a positive autocorrelation is present in the time series.
• B)We fail to reject the null hypothesis and conclude that no positive autocorrelation is present in the time series.
• C)The hypothesis test is inconclusive.
• D)We fail to reject the null hypothesis and conclude that a positive autocorrelation is present in the time series.

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Definitions:

Residual

The difference between an observed value and the predicted value given by a statistical model.

R Squared

A statistical measure that represents the proportion of the variance for a dependent variable that's predicted from an independent variable or variables in a regression model.

Regression

A statistical method used to determine the relationship between a dependent variable and one or more independent variables.

Correlation

A statistical measure that describes the extent to which two variables change together, and how strong the relationship is between them.