Which of the following statements about linear regression analysis is most accurate? A) The coefficient of determination is defined as the strength of the linear relationship between two variables. B) An assumption of linear regression is that the residuals are independently distributed. C) When there is a strong relationship between two variables we can conclude that a change in one will cause a change in the other.
b for me… note. residuals should be normally idependently distributed…
A…I think. Correlation is the strength ® so coef of det r^2 also is the strength? I think B needs to say “normally”
A I got burned by a q like this before…planner is right…r^2 is also called the coefficient of determinations
Yea, r^2 explains how well the regression model explains total regressed squares but you can have more then one variable in the regression. Coefficient of determinations is only for a single linear regression. while, B, is fundamental rule in econometrics. So B.
Correct ans is B.
China’s nominal interest rates, along with the inflation rate, have been declining over the past five years as a result of governmental efforts to privatize state-owned enterprises and monetary austerity controls over its economy. Over the long run, the Chinese yuan would be expected to: A) depreciate relative to countries with high interest rates. B) appreciate relative to countries with high interest rates. C) appreciate relative to countries with low inflation.
restrictive monetary policy - so in the long run - appreciate relative to countries with high interest rates. B?
Wouldn’t nominal interest rates increase with a restrictive monetary policy? Monetary austerity means government is more likely to run budget surpluses, so the fiscal policy is restrictive. This indicates interest rates are going down. Lower interest rates will reduce the financial (capital) account, but increase the current account to balance. Also, the current account should increase as there is less aggregate demand. An increase in exports will cause higher demand for the base currency, causing it to appreciate, but the lower interest rates cause capital outflow to other higher interest rate countries. So the effect is mixed. However, I think CFA says that interest rates may have more merit? So the currency would depreciate. Is it A?
i’ll go for A just to remind myself that i have barely touched econ and need to soon. if chinese nominal interest rates down and inflation, i’d think real interest rates would be decreasing which in long run would make china’s currency depreciate vs other countries? i promise to hit econ tomorrow. i can’t ignore it forever.
yeaaa - I was with Ali and Banni in the thought process and got it wrong. cpk is correct.
and officially i will open up econ and do some tomorrow. doing derivs today, did FI yesterday, will do econ and maybe some Pm tomorrow. game on. i don’t know BOP or any of this stuff well at all. if it’s not triangular arbitrage or some easy FX something, currently i am f’d for lack of studying there.