In multiple regression analysis, residual analysis is used to test the requirement that ___________.
A) The variation in the residuals is the same for all predicted values of Y
B) The independent variables are the direct cause of the dependent variable
C) The number of independent variables included in the analysis is correct
D) The prediction error is minimized

Question

Quizplus · Accepted Answer

Residual analysis tests the assumption of homoscedasticity, which means that the variation in the residuals should be the same for all predicted values of Y. This is important because if there is heteroscedasticity (different variation in residuals for different predicted values of Y), the regression coefficients may still be unbiased but their standard errors will be biased, leading to incorrect inferences and hypothesis testing.

In Multiple Regression Analysis, Residual Analysis Is Used to Test