When estimating a regression line, a high R2 tells us we have
A) a good fit.
B) large residuals.
C) correctly determined the direction of causation.
D) all of the above
E) none of the above
Question 2
When we use ordinary least squares to determine the relationship between changes in consumption and changes in both current and lagged income, we find that
A) only current income influences current consumption.
B) current income has no impact on current consumption.
C) consumption is not affected by income in any quarter.
D) current income, last quarter's income, and income two quarter's ago all have the same impact on current consumption.
E) current income has a greater impact on consumption than income lagged one quarter.
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