Short answer questions a . Agree or Disagree (and justify your answer): If the d

Question

Short answer questions

a. Agree or Disagree (and justify your answer): If the distribution of error term u in a population regression model is not normal, then the usual t-statistic is useless.

b. Agree or Disagree (and justify your answer): If you add an independent variable to a multiple regression model and the R2 value rises, this indicates that adding the variable to the model was a good idea.

c. A model to explain the standardized outcome on a final exam (stndfnl) in terms of percentage of classes attended (atndrte) and prior college grade point average (priGPA) is:

Explanation / Answer

a. Disagree. Even if the error terms or the residuals are not normally distributed the regression or the OLS method is still considered as a good estimator. We can use robust inference in case the error terms are not normally distributed. Problems of non-normal distribution of error term can be handled by methods such as Gauss-Markov Theorem.

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