Question

Select the appropriate technique with the problem you are looking for.

a. Checking the equal variance assumption
b. Checking the normal assumption
c. Check for model misspecification
d. Check for dependent errors
1. Create a scatterplot of hat versus your QN X's
2. Create a stem-and-leaf display of the zresiduals
3. Create a scatterplot of the residuals versus time period collected
4. Create a scatterplot of the residuals versus yhat
5. Create a scatterplot of the residuals versus your QN X's

Answer 1

A, B, C, D

Explanation:

(A) Checking the Equal Variance Assumption, the appropriate technique to use is:

- The ANOVA (Analysis of Variance) F test

- Plot residuals against fitted values

(B) Checking the Normal Assumption, the appropriate techniques to use are:

- Test for Kurtosis & Skewness

- Kolmogorov-Smirnov Test

- Q-Q Plots (the graphical method) also known as Quantile Plot

- Do not use a histogram; it is not advisable

(C) Checking for Model Misspecification, the appropriate techniques to use are:

- The Ramsey Regression Specification Error Test; also called RESET

- The Davidson & MacKinnon J. Test

(D) Checking for dependent errors, the appropriate technique to use is:

- Plot residuals against time variables