Question

Which of the following statements is correct about Assumption 3?

a.When we use ACF method, significant correlations beyond lag=0 are ok
b.When we use the residual plot method, patterns in the residuals are ok
c.It's okay for us to have some observations of the dependent variable (Y) be related with others
d.We must use our intuition and two other tests for this assumption

Answer 1

The correct statement about Assumption 3 is that it's okay for some observations of the dependent variable to be related to each other. Assumption 3 states that a linear relationship between different values of the dependent variable does not invalidate the use of correlation analysis.

Step-by-step explanation:

The correct statement about Assumption 3 is option c: It's okay for us to have some observations of the dependent variable (Y) be related with others.

Assumption 3 in testing the significance of the correlation coefficient states that it is acceptable for some observations of the dependent variable to be related to each other. In other words, there can be a linear relationship between different values of the dependent variable, and it does not invalidate the use of correlation analysis.

• Example: If we are studying the relationship between the amount of sleep and academic performance, it is expected that students who sleep more hours tend to have higher grades, and students who sleep fewer hours tend to have lower grades. This correlation between different values of the dependent variable (grades) is acceptable according to Assumption 3.