If the Durbin-Watson statistic,d,is found to be 2,which of the following would be considered true?
A)The correlation between errors close-by in time is strong.
B)The errors are not independent.
C)The errors are not autocorrelated.
D)The regression model is not based on a time-series.

Question

Quizplus · Accepted Answer

A Durbin-Watson statistic of 2 indicates that there is no significant autocorrelation between the errors in the regression model. This means that the errors are not correlated with each other over time, and therefore, they are independent. So, option C is the correct choice. Options A and B are incorrect because they suggest that there is a strong correlation between the errors, which contradicts the Durbin-Watson statistic of 2. Option D is also incorrect because the Durbin-Watson statistic can be used for both cross-sectional and time-series data.

If the Durbin-Watson Statistic,d,is Found to Be 2,which of the Following