A Researcher Gathers Data on 25 Households and Estimates the Following

question 102

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:

Antidepressants

Medications used to treat depression and other conditions by balancing brain chemicals that affect mood and emotions.

Adolescents

The transitional stage of human development that occurs between childhood and adulthood, usually considered to start with puberty.

Electroconvulsive Therapy

Electroconvulsive therapy is a medical treatment most commonly used for severe depression, involving the induction of a controlled seizure in the patient through electrical currents.

Severe Depression

A major depressive disorder characterized by intense and persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in most activities.