A Researcher Gathers Data on 25 Households and Estimates the Following

question 1

Multiple Choice

A researcher gathers data on 25 households and estimates the following model: Expenditure = β₀ + β₁ Income + ε. A residual plot of the estimated model is shown in the accompanying graph. Which of the following can be inferred from the residual plot?

• A) The residuals have little variation.
• B) The residuals do not exhibit any pattern.
• C) The residuals seem to fan out across the horizontal axis.
• D) The residuals are evenly distributed across the horizontal axis.

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Definitions:

Land

The surface of the earth, extending downward to the center and upward indefinitely into space, inclusive of natural resources and fixtures.

Deed of Trust

A legal document in some states that transfers the title of real property to a trustee as security for a loan until the grantor repays the lender.

Third Party

An individual or group besides the two primarily involved in a situation or contract, often with a lesser direct interest.

Real Property

Land and anything permanently attached to it, such as buildings and structures, including rights and interests associated with the land.