Question

You have estimated a linear regression model relating Y to X. Your professor says, "I think that the relationship between Y and X is nonlinear." How would you test the adequacy of your linear regression? (Check all that apply )

A. Compare the fit between of linear regression to the non-linear regression model.
B. There is evidence in favor of a non-linear relationship if there is zero correlation between the dependent and independent variable.
C. If adding a quadratic term, you could test the hypothesis that the estimated coefficient of the quadratic term is significantly different from zero.
D. All of the above.

Answer 1

C

Explanation:

If we add a quadratic term to our correlation and its coefficient is tending to zero, we can say that the term becomes unnecessary and therefore the relationship between the variables X and Y tends more to be linear. We can also check the correlation coefficients when making the two correlations.