In a multiple regression model, the error term ε is assumed to _____.
A) have a mean of 1
B) have a variance of 0
C) have a standard deviation of 1
D) be normally distributed

Question

Quizplus · Accepted Answer

The error term ε is assumed to be normally distributed in a multiple regression model. This is a fundamental assumption of linear regression analysis, and it allows for meaningful interpretation of the regression coefficients and hypothesis testing. The error term is also assumed to have a mean of 0, but not necessarily a variance of 0 or a standard deviation of 1.

In a Multiple Regression Model, the Error Term ε Is