Suppose an Economist Has Developed a Model for Forecasting Annual

question 29

Multiple Choice

Suppose an economist has developed a model for forecasting annual consumption,y_t,as function of total labor income,x_1t,and total property income,x_2t based on 20 years on annual data.The following regression model has been developed: = 7.81 + 0.91x_1t + 0.57x_2t with the standard error = 1.29 and the Durbin-Watson d statistic = 2.09.Using an alpha = .05,which of the following is the correct critical value for testing whether the residuals are autocorrelated?

• A)1.20 and 1.41
• B)1.10 and 1.54
• C)1.08 and 1.53
• D)Can't be determined without seeing the residuals.

---

Definitions:

Days Sales Outstanding

A measure that calculates the average time it takes for a company to collect payments after a sale has been made.

Accounts Receivable

Funds that customers owe to a business for products or services rendered but for which payment has not yet been received.

Net Sales

Revenue generated from the sale of goods or services, minus returns, allowances, and discounts.

Debt Ratio

A financial ratio that measures the extent of a company's leverage by comparing total liabilities to total assets.