Suppose That You Are Performing the RESET Test for the Inclusion

question 18

Multiple Choice

Suppose that you are performing the RESET test for the inclusion of higher-order polynomials and that in the second stage you estimate the sample regression function and the predicted value terms are statistically significant.You decide that

• A)higher-order polynomials are not necessary for this regression.
• B)you should investigate the inclusion of higher-order polynomials in your regression model.
• C)neither regression model is appropriate.
• D)higher-order polynomials are never appropriate to include in regression models.

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