Suppose an economist has developed a model for forecasting annual consumption,y_t,as function of total labor income,x₁_t ,and total property income,x₂_t based on 20 years on annual data.The following regression model has been developed: _t= 7.81 + 0.91x₁_t+ 0.57x₂_t with the standard error = 1.29 and the Durbin-Watson d statistic = 2.09.Using an alpha = .05,which of the following conclusions should be reached? A)Conclude that no positive autocorrelation exists B)Conclude that significant positive autocorrelation exists C)Uncertain whether positive or negative autocorrelation exists D)No significant autocorrelation exists.

Question

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The Durbin-Watson d statistic is used to test for the presence of autocorrelation in the residuals. The range of values for the Durbin-Watson d statistic is from 0 to 4, with values near 2 indicating no autocorrelation. In this case, the d statistic is 2.09, which is close to 2, indicating no significant positive or negative autocorrelation. Therefore, the conclusion should be A) Conclude that no positive autocorrelation exists.

Suppose an Economist Has Developed a Model for Forecasting Annual