Suppose an Economist Has Developed a Model for Forecasting Annual

question 101

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 conclusions should be reached?

• A)Conclude that no positive autocorrelation exists
• B)Conclude that significant positive autocorrelation exists
• C)Uncertain whether positive or negative autocorrelation exists
• D)No significant autocorrelation exists.

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Definitions:

Implementation

The process of executing a plan or policy so that the concept becomes an actuality, often involving the detailed steps and processes to achieve specific objectives.

Problem-Solving Actions

Steps or measures taken to identify solutions to specific difficulties or challenges.

Heuristics

Strategies for simplifying decision-making.

Complex Situations

Scenarios where multiple factors interact in intricate and sometimes unpredictable ways, often making problem-solving or decision-making challenging.