Consider the following to answer the question(s) below:
The average monthly residential mortgage lending rate in Canada is available monthly beginning in 1951. A scatterplot of the residuals against time for 747 months from January 1951 to March 2013 is shown below. The rate peaked in September of 1981 at 21.46%. The Durbin-Watson statistic has a value of 0.01.
-What conclusion about autocorrelation in the model can we draw using the value of the Durbin-Watson statistic and the critical limits, dL=1.87736 and dU=1.88270?
A) There is evidence of positive autocorrelation.
B) There is evidence of negative autocorrelation.
C) There is no evidence of positive autocorrelation.
D) There is no evidence of negative autocorrelation.
E) The test is inconclusive.

Question

Consider the following to answer the question(s) below:
The average monthly residential mortgage lending rate in Canada is available monthly beginning in 1951. A scatterplot of the residuals against time for 747 months from January 1951 to March 2013 is shown below. The rate peaked in September of 1981 at 21.46%.  The Durbin-Watson statistic has a value of 0.01.
-What conclusion about autocorrelation in the model can we draw using the value of the Durbin-Watson statistic and the critical limits, dL=1.87736 and dU=1.88270?
A) There is evidence of positive autocorrelation. 
B) There is evidence of negative autocorrelation. 
C) There is no evidence of positive autocorrelation. 
D) There is no evidence of negative autocorrelation. 
E) The test is inconclusive.

Quizplus · Accepted Answer

The Durbin-Watson statistic has a value less than the lower critical limit of 1.87736, indicating evidence of positive autocorrelation in the model.

Consider the Following to Answer the Question(s) Below