Serial correlation occurs when:
A) the value of the random error in one period depends on one or more independent variables.
B) the random errors are correlated over time.
C) the values of two or more regression coefficients are correlated.
D) two or more independent variables tend to move together.
E) the size of the random error increases over time.

Question

Quizplus · Accepted Answer

Serial correlation, also known as autocorrelation, refers to the correlation between the error terms of a regression model over time. This means that the error term in one period is correlated with the error term in another period, making the assumption of independent errors invalid.

Serial Correlation Occurs When