The editors of a national automotive magazine recently studied 30 different automobiles sold in the United States with the intent of seeing whether they could develop a multiple regression model to explain the variation in highway miles per gallon.
A number of different independent variables were collected. Included in these were two variables described as follows:
Car Type (categorical) Whether Car has ABS Brakes (categorical)
1 = Four door sedan 1 = All wheel ABS
2 = Luxury car 2 = Rear wheel ABS
3 = Compact truck 3 = No ABS
4 = Full size truck
5 = Sports car
If these two variables are to be included in a regression model, how many additional variables will be needed?
A) The model explains nearly 63 percent of the variation in the dependent variable.
B) If tested at the 0.05 significance level, the overall model would be considered statistically significant.
C) The variable X1 has a slope coefficient that is significantly different from zero if tested at the 0.05 level of significance.
D) All of the above are true.
Question 2
The process of selecting the forecasting technique to use in a particular application is called:
A) model diagnosis.
B) model specification.
C) validity checking.
D) model fitting.
