QUESTION 4 2 points Saved Choose the missing word or phrase: The R squared value

Question

QUESTION 4 2 points Saved Choose the missing word or phrase: The R squared value is calculated by finding the percent decrease in from a "baseline" or "constant-only" model to the model of interest o Variance of the independent variable Sum of squared residuals (SSR) O Experience coeffiçgient O Y-intercept QUESTION 5 2 points Save Answer In the question above, what does the "baseline" or "constant-only" model predict? O The y-intercept is zero, so earnings is directly proportional to experience. O Each additional year of experience has a constant effect on earnings for all individuals O All individuals have the same eamings, regardless of experience. O All individuals have the same experience level, regardless of earnings.

Explanation / Answer

The R-squared is the fraction by which the variance of the errors is less than the variance of the dependent variable.

4. So, R squared is calculated by finding the percentage decrease in SSR.

5. The Base line or constant-only model predicts that every observation will have equal sample mean. This means that each additional year of experience has a constant effect on earnings of all individuals.

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