Suppose that you plot the residuals from a regression of GDP on the unemployment rate and you get the following
You would conclude that the error terms are
A)definitely autocorrelated.
B)likely not autocorrelated.
C)possibly autocorrelated and you would perform a formal test for autocorrelation.
D)possibly autocorrelated and you would perform a correction for heteroskedasticity.

Question

Suppose that you plot the residuals from a regression of GDP on the unemployment rate and you get the following 
You would conclude that the error terms are
A)definitely autocorrelated. 
B)likely not autocorrelated. 
C)possibly autocorrelated and you would perform a formal test for autocorrelation. 
D)possibly autocorrelated and you would perform a correction for heteroskedasticity.

Quizplus · Accepted Answer

The scatter plot of residuals does not show any clear pattern, but there are a few points that are closer together than others, which suggests the possibility of autocorrelation. Therefore, it would be appropriate to perform a formal test for autocorrelation to determine if there is a significant relationship among the error terms.

Suppose That You Plot the Residuals from a Regression of GDP