While the OLS or simple linear regression method is a very powerful tool and com
ID: 3180469 • Letter: W
Question
While the OLS or simple linear regression method is a very powerful tool and commonly used analysis, there are also several disadvantages to using this method. Select the statements that are true of OLS.
The OLS method seeks to find the relationship (or fit the regression line) with the highest possible residual values.
OLS is not suitable for studying spatial variance as it assumes a single common (stationary) spatial process across a study area
In the real-world, many relationships are non-linear for which OLS is not appropriate
OLS is useful for many real-life datasets that are non-linear
a.The OLS method seeks to find the relationship (or fit the regression line) with the highest possible residual values.
b.OLS is not suitable for studying spatial variance as it assumes a single common (stationary) spatial process across a study area
c.In the real-world, many relationships are non-linear for which OLS is not appropriate
d.OLS is useful for many real-life datasets that are non-linear
Explanation / Answer
OLS is only used for linear relationships. In the real world, many relationships are non linear for which OLS is not appropriate and other models are used.
Therefore c) is the correct answer here as that is a limitation of Ordinary least square.
Note that:The derivation of OLS also assumes a linear relationship between the dependent and the independent variable.
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