ECO 391 Ch.12- Dellachiesa | Actual
study set | Questions and Answers
1 independent variable
Y=B0+B1X1+Error - ANSW-Simple Linear Regression Model
Multiple independent variables
Y=B0+B1X1+B2X2+B3X3+error - ANSW-Multiple Linear Regression Model
1. Establish if there is relationship between the 2 variables (y and X's) and if that relationship is
statistically significant
2. Forecast New observations
Can we use what we know about the relationship to forecast unobserved values of our dependent
variable? - ANSW-Objectives for Regression Analysis (2 reasons)
1. Choose independent variables based on their relationship with the dependent variable
2. Check the overall model performance and how much each variable contributes to the model
performance. - ANSW-Variable Selection for Multiple regression Analysis (2 strategies)
1. We are being too strict and arbitrary in choosing which variables should stay in this model
2. Significance level (5%) was an arbitrary decision
3. By Dropping out variables, we may be losing information that is useful in explaining the variance of
and forecasting the values of the independent variable. - ANSW-Potential problems (3)
Significantly - ANSW-The R^2 grows _____ when we add an X variable that is very significant explaining
the changes in Y
minimally - ANSW-The R^2 grows _____ when we add a X variable that is not very significant explaining
the changes in Y.
Depends if if it large enough to out weigh increase in Q of X - ANSW-Adding more independent variables
- ANSW-The _____ you add to the model, the _____ becomes. Thus, unless that additional independent
variable is good at explaining the variations in the dependent variable, adding more variables can reduce
the _____
R^2= SSR/SST - ANSW-Coefficient of determination
The best linear approximation - ANSW-One way to analyze the relationship among two or more variables
is ______ of our dependent variable (our Y variable) and our independent variable (our X variables
How close the data is to the fitted regression line. - ANSW-We use the R-squared or coefficient of
determination to measure _____
We want to minimize the SSE - ANSW-We want to minimize the SSE
Y-Hat
study set | Questions and Answers
1 independent variable
Y=B0+B1X1+Error - ANSW-Simple Linear Regression Model
Multiple independent variables
Y=B0+B1X1+B2X2+B3X3+error - ANSW-Multiple Linear Regression Model
1. Establish if there is relationship between the 2 variables (y and X's) and if that relationship is
statistically significant
2. Forecast New observations
Can we use what we know about the relationship to forecast unobserved values of our dependent
variable? - ANSW-Objectives for Regression Analysis (2 reasons)
1. Choose independent variables based on their relationship with the dependent variable
2. Check the overall model performance and how much each variable contributes to the model
performance. - ANSW-Variable Selection for Multiple regression Analysis (2 strategies)
1. We are being too strict and arbitrary in choosing which variables should stay in this model
2. Significance level (5%) was an arbitrary decision
3. By Dropping out variables, we may be losing information that is useful in explaining the variance of
and forecasting the values of the independent variable. - ANSW-Potential problems (3)
Significantly - ANSW-The R^2 grows _____ when we add an X variable that is very significant explaining
the changes in Y
minimally - ANSW-The R^2 grows _____ when we add a X variable that is not very significant explaining
the changes in Y.
Depends if if it large enough to out weigh increase in Q of X - ANSW-Adding more independent variables
- ANSW-The _____ you add to the model, the _____ becomes. Thus, unless that additional independent
variable is good at explaining the variations in the dependent variable, adding more variables can reduce
the _____
R^2= SSR/SST - ANSW-Coefficient of determination
The best linear approximation - ANSW-One way to analyze the relationship among two or more variables
is ______ of our dependent variable (our Y variable) and our independent variable (our X variables
How close the data is to the fitted regression line. - ANSW-We use the R-squared or coefficient of
determination to measure _____
We want to minimize the SSE - ANSW-We want to minimize the SSE
Y-Hat
