Chapter 14

Multiple Regression and Correlation Analysis

True/False
1. Multiple regression analysis is used when two or more independent variables are used to predict a
value of a single dependent variable.
Answer: True
Difficulty: Easy
Goal: 1
AACSB: AS

2. Multiple regression analysis is used when one independent variable is used to predict values of two or
more dependent variables.
Answer: False
Difficulty: Easy
Goal: 1

3. The values of b1, b2 and b3 in a multiple regression equation are called the net regression coefficients.
Answer: True
Difficulty: Easy
Goal: 1

4. A net regression coefficient, b3, indicates the change in the predicted value for a unit change in X3
when all other Xi variables are held constant.
Answer: True
Difficulty: Easy
Goal: 1

5. Multiple regression analysis examines the relationship of several dependent variables on the
independent variable.
Answer: False
Difficulty: Medium
Goal: 1

6. A multiple regression equation defines the relationship between a dependent variable and a set of
independent variables in the form of an equation.
Answer: True
Difficulty: Easy
Goal: 1
AACSB: AS

7. In multiple regression analysis, a and b1 are sample statistics that estimate the population parameters,

and i .
Answer: True

Difficulty: Easy

Goal: 1

8. The coefficient of multiple determination reports the strength of the association between a dependent
variable and a set of independent variables.
Answer: True
Difficulty: Easy
Goal: 3

Test Bank, Chapter238

14

9. In a multiple regression analysis with two independent variables, the multiple standard error of
estimate measures the variation of the dependent variable about a regression plane.
Answer: True
Difficulty: Easy
Goal: 3

10. A coefficient of multiple determination could be equal to 0.76.

Answer: False
Difficulty: Easy
Goal: 3

11. A coefficient of multiple determination equaling 0.99 shows that the dependent variable is inversely
related to a set of independent variables.
Answer: False
Difficulty: Easy
Goal: 3

12. Multiple R 2 measures the proportion of explained variation relative to total variation.
Answer: True
Difficulty: Easy
Goal: 3
AACSB: AS

13. The multiple coefficient of determination, R 2 , reports the proportion of the variation in Y that is not
explained by the variation in the set of independent variables.
Answer: False
Difficulty: Medium
Goal: 3

14. A correlation matrix shows individual correlation coefficients for all pairs of variables.
Answer: True
Difficulty: Easy
Goal: 7

15. A correlation matrix can be used to assess multicollinearity between independent variables.
Answer: True
Difficulty: Easy
Goal: 7
AACSB: AS

16. A correlation matrix can be used to assess homoscedasticity between independent variables.
Answer: False
Difficulty: Easy
Goal: 7

17. To test the global hypothesis in multiple regression analysis, a t-statistic is used.
Answer: False
Difficulty: Easy
Goal: 2

18. To test the global hypothesis in multiple regression analysis, an F-statistic is used.
Answer: True
Difficulty: Easy
Goal: 2
AACSB: AS

19. A dummy variable is added to the regression equation to control for error.
Answer: False
Difficulty: Easy
Goal: 8

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Test Bank, Chapter 14

20. If a dummy variable for gender is included in a multiple regression analysis, "male" would be coded
as 1 and "female" would be coded as 2.
Answer: False
Difficulty: Easy
Goal: 8

21. Autocorrelation often happens when data has been collected over periods of time.
Answer: True
Difficulty: Easy
Goal: 7

22. Homoscedasticity occurs when the variance of the residuals ( Y Y ) is different for different values
of Y .
Answer: False
Difficulty: Easy
Goal: 6
AACSB: AS

23. In multiple regression analysis, a residual is the difference between the value of an independent
variable and its corresponding dependent variable value.
Answer: False
Difficulty: Easy
Goal: 6

24. In multiple regression analysis, a residual is the difference between the value of a dependent variable,
Y, and its predicted value, Y .
Answer: True
Difficulty: Easy
Goal: 6

Multiple Choice

25. In multiple regression analysis, residual analysis is used to test the requirement that
A) the variation in the residuals is the same for all fitted values of Y
B) the independent variables are the direct cause of the dependent variable
C) the number of independent variables included in the analysis is correct
D) prediction error is minimized
Answer: A
Difficulty: Medium
Goal: 6
AACSB: AS

26. A valid multiple regression analysis assumes or requires that

A) the dependent variable is measured using an ordinal, interval, or ratio scale
B) the residuals follow an F-distribution
C) the independent variables and the dependent variable have a linear relationship
D) the observations are autocorrelated
Answer: C
Difficulty: Medium
Goal: 1

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27. How is the degree of association between a set of independent variables and a dependent variable
measured?
A) Confidence intervals.
B) Autocorrelation
C) Coefficient of multiple determination
D) Standard error of estimate
Answer: C
Difficulty: Medium
Goal: 3
AACSB: AS

28. In a multiple regression ANOVA table, explained variation is represented by

A) the regression sum of squares
B) the total sum of squares
C) the regression coefficients
D) the correlation matrix
Answer: A
Difficulty: Medium
Goal: 2
AACSB: AS

29. If the coefficient of multiple determination is 0.81, what percent of variation is not explained?
A) 19%
B) 90%
C) 66%
D) 81%
Answer: A
Goal: 3

30. In multiple regression analysis, testing the global null hypothesis that the multiple regression
coefficients are all zero is based on
A) a z statistic
B) a t statistic
C) a F statistic
D) binomial distribution
Answer: C
Difficulty: Easy
Goal: 2

31. What is the range of values for multiple R?

A) 100% to 100% inclusive
B) 100% to 0% inclusive
C) 0% to +100% inclusive
D) Unlimited range
Answer: C
Difficulty: Easy
Goal: 3

32. When does multicollinearity occur in a multiple regression analysis?

A) The dependent variables are highly correlated
B) The independent variables are minimally correlated
C) The independent variables are highly correlated
D) The independent variables have no correlation
Answer: C
Difficulty: Medium
Goal: 7

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Test Bank, Chapter 14

33. In multiple regression analysis, when the independent variables are highly correlated, this situation is
called ____________________.
A) Autocorrelation
B) Multicollinearity
C) Homoscedasticity
D) curvilinearity
Answer: B
Difficulty: Hard
Goal: 7
AACSB: AS

34. In the general multiple regression equation which of the following variables represents the Y
intercept?
A) b1
B) x1
C) Y
D) a
Answer: D
Difficulty: Easy
Goal: 1

35. If there are four independent variables in a multiple regression equation, there are also four
A) Y-intercepts.
B) regression coefficients.
C) dependent variables.
D) constant terms.
Answer: B
Difficulty: Easy
Goal: 1

36. What does the multiple standard error of estimate measure?

A) Change in Y for a change in X1
B) The "error" or variability in predicting Y
C) The regression mean square error in the ANOVA table
D) Amount of explained variation
Answer: B
Difficulty: Medium
Goal: 3

37. If a multiple regression analysis is based on ten independent variables collected from a sample of 125
observations, what will be the value of the denominator in the calculation of the multiple standard error of
estimate?
A) 125
B) 10
C) 114
D) 115
Answer: C
Difficulty: Medium
Goal: 3

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38. If the correlation between the two independent variables of a regression analysis is 0.11 and each
independent variable is highly correlated to the dependent variable, what does this indicate?
A) Multicollinearity between these two independent variables
B) A negative relationship is not possible
C) Only one of the two independent variables will explain a high percent of the variation
D) An effective regression equation
Answer: D
Difficulty: Easy
Goal: 7

39. If the correlation between the two independent variables of a regression analysis is 0.11 and each
independent variable is highly correlated to the dependent variable, what does this indicate?
A) Only one of the independent variables should be used in the regression equation.
B) The independent variables are strongly related.
C) Two separate regression equations are required.
D) Both independent variables should be used to predict the dependent variable.
Answer: D
Difficulty: Easy
Goal: 7

40. What does the correlation matrix for a multiple regression analysis contain?
A) Multiple correlation coefficients
B) Simple correlation coefficients
C) Multiple coefficients of determination
D) Multiple standard errors of estimate
Answer: B
Difficulty: Easy
Goal: 7

41. What can we conclude if the global test of regression does not reject the null hypothesis?
A) A strong relationship exists among the variables
B) No relationship exists between the dependent variable and any of the independent variables
C) The independent variables are good predictors
D) Good forecasts are possible
Answer: B
Difficulty: Easy
Goal: 4

42. What can we conclude if the global test of regression rejects the null hypothesis?
A) Strong correlations exist among the variables
B) No relationship exists between the dependent variable and any of the independent variables
C) At least one of the net regression coefficients is not equal to zero.
D) Good predictions are not possible
Answer: C
Difficulty: Easy
Goal: 4

43. What are the degrees of freedom associated with the regression sum of squares?
A) Number of independent variables
B) 1
C) F-ratio
D) (n 2)
Answer: A
Difficulty: Medium
Goal: 2
AACSB: AS

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Test Bank, Chapter 14

44. Which of the following is a characteristic of the F-distribution?

A) Normally distributed
B) Positively skewed
C) Negatively skewed
D) Equal to the t-distribution
Answer: B
Difficulty: Medium
Goal: 4
AACSB: CA

45. In a regression analysis, three independent variables are used in the equation based on a sample of
forty observations. What are the degrees of freedom associated with the F-statistic?
A) 3 and 39
B) 4 and 40
C) 3 and 36
D) 2 and 39
Answer: C
Difficulty: Medium
Goal: 4

46. Hypotheses concerning individual regression coefficients are tested using which statistic?
A) t-statistic
B) z-statistic
C) 2 (chi-square statistic)
D) F
Answer: A
Difficulty: Easy
Goal: 5

47. The coefficient of determination measures the proportion of

A) explained variation relative to total variation.
B) variation due to the relationship among variables.
C) error variation relative to total variation.
D) variation due to regression.
Answer: A
Difficulty: Medium
Goal: 3

48. What happens as the scatter of data values about the regression plane increases?
A) Standard error of estimate increases
B) R 2 decreases
C) (1 R 2 ) increases
D) Error sum of squares increases
E) All of the above are correct
Answer: E
Difficulty: Medium
Goal: 3
AACSB: AS
Scrambling: Locked

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49. For a unit change in the first independent variable with other things being held constant, what change
can be expected in the dependent variable in the multiple regression equation Y 5.2 6.3 X 1 7.1X 2 ?
A) 7.1
B) + 6.3
C) + 5.2
D) + 4.4
Answer: B
Difficulty: Easy
Goal: 1

50. The best example of a null hypothesis for a global test of a multiple regression model is:
A) H O : 1 2 3 4
B) H O : 1 2 3 4
C) H 0 : 1 0
D) If F is greater than 20.00 then reject
Answer: A
Difficulty: Easy
Goal: 4

51. The best example of an alternate hypothesis for a global test of a multiple regression model is:
A) H 1 : 1 2 3 4
B) H 1 : 1 2 3 4
C) H 1 : Not all the ' s are 0
D) If F is less than 20.00 then fail to reject
Answer: C
Difficulty: Easy
Goal: 4

52. The best example of a null hypothesis for testing an individual regression coefficient is:
A) H O : 1 2 3 4
B) H O : 1 2 3 4
C) H 0 : 1 0
D) If F is greater than 20.00 then reject
Answer: C
Difficulty: Easy
Goal: 5

AACSB: AS

53. In multiple regression analysis, residuals ( Y Y ) are used to:

A) Provide a global test of a multiple regression model.
B) Evaluate multicollinearity
C) Evaluate homoscedasticity
D) Compare two regression coefficients
Answer: C
Difficulty: Easy
Goal: 6

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54. In multiple regression, a dummy variable can be included in a multiple regression model as
A) An additional quantitative variable
B) A nominal variable with three or more values
C) A nominal variable with only two values
D) A new regression coefficient
Answer: C
Difficulty: Easy
Goal: 8

55. Multiple regression analysis is applied when analyzing the relationship between
A) An independent variable and several dependent variables
B) A dependent variable and several independent variables
C) Several dependent variables and several independent variables
D) Several regression equations and a single sample
Answer: B
Difficulty: Easy
Goal: 1

Fill-in-the-Blank
56. Violating the need for successive observations of the dependent variable to be uncorrelated is called
____________________________.
Answer: autocorrelation
Difficulty: Medium
Goal: 7

57. Multiple R 2 measures the proportion of ____________________.

Answer: explained variation
Difficulty: Medium
Goal: 3

58. In multiple regression analysis, a variable whose possible outcomes are coded as a "1" or a "0" is
called a(n) __________________________ .
Answer: dummy variable
Difficulty: Easy
Goal: 8

59. If a dependent variable and one or more independent variables are inversely related, what is the sign
for the regression coefficients of the independent variables? ______________
Answer: negative
Difficulty: Easy
Goal: 1

60. A frequent use of a correlation matrix is to check for _____________.

Difficulty: Easy
Goal: 7

Answer: multicollinearity

61. In a multiple regression analysis ANOVA table, what determines the number of degrees of freedom
associated with the regression sum of squares? ____________________ .
Answer: the number of independent variables
Difficulty: Medium
Goal: 2

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62. If the null hypothesis, H 0 : 4 0 , is not rejected, what effect does the independent variable, X4,
have when predicting the dependent variable? ______
Answer: no effect
Difficulty: Easy
Goal: 5

63. What is the proportion of total variation in the dependent variable that is explained by the
independent variable for a multiple R 2 = 0.90? _______
Answer: 90% or 0.90
Difficulty: Easy
Goal: 3

64. Given a multiple linear regression equation Y = 5.1 + 2.2X1 3.5X2, what will a unit increase in the
independent variable, X2, , mean in the change of Y assuming other things are held constant? ________
Answer: -3.5
Difficulty: Easy
Goal: 1

65. When the variance of the differences between the actual and the predicted values of the dependent
variable are approximately the same, the variables are said to exhibit
_______________________________.
Answer: homoscedasticity
Difficulty: Medium
Goal: 6
66. A method for selecting the best subset of variables in a multiple regression equation is:
____________
Answer: Stepwise Regression
Difficulty: Easy
Goal: 9
AACSB: AS
67. In the following regression equation, Y a b1 x1 b2 x 2 b3 ( x1 x 2 ), ( x1 x 2 ) is the ___________
Answer: Interaction of x 1 and x 2

Difficulty: Medium

Goal: 10

AACSB: AS

Multiple Choice

Use the following to answer questions 68-71:

The following correlations were computed as part of a multiple regression analysis that used education,
job, and age to predict income.

In c o m e
E d u c a tio n
Job
A ge

247

In c o m e
1 .0 0 0
0 .6 7 7
0 .1 7 3
0 .3 6 9

E d u c a tio n

Jo b

A ge

1 .0 0 0
0 .1 8 1
0 .0 7 3

1 .0 0 0
0 .6 8 9

1 .0 0 0

Test Bank, Chapter 14

68. What is this table called?

A) Net regression coefficients
B) Coefficients of nondetermination
C) Analysis of variance
D) Correlation matrix
Answer: D
Difficulty: Medium

Goal: 7

69. Which is the dependent variable?

A) Income
B) Age
C) Education
D) Job
Answer: A
Difficulty: Medium

Goal: 1

70. Which independent variable has the strongest association with the dependent variable?
A) Income
B) Age
C) Education
D) Job
Answer: C
Difficulty: Medium
Goal: 7
71. Which independent variable has the weakest association with the dependent variable?
A) Income
B) Age
C) Education
D) Job
Answer: D
Difficulty: Medium
Goal: 7
Fill-in-the-Blank

Use the following to answer questions 72-78:

It has been hypothesized that overall academic success for college freshmen as measured by grade point
average (GPA) is a function of IQ scores X 1 , hours spent studying each week X 2 , and one's high

school average X 3 . Suppose the regression equation is: Y 6.9 0.055 X 1 0.107 X 2 0.0853 X 3 .
The multiple standard error is 6.313 and R 2 = 0.826.
72. What is the predicted GPA for a student with an IQ of 108, 32 hours spent studying per week and a
high school average of 82? _____
Answer: 3.1446
Difficulty: Medium
Goal: 1

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73. What is the predicted GPA if the IQ is 108, the number of hours spent studying is 30, and the high
school average is 82? ______
Answer: 2.9306
Difficulty: Medium
Goal: 1
74. Assuming other independent variables are held constant, what effect on the GPA will there be if the
numbers of hours spent studying per week increases from 32 to 36? ________
Answer: +0.428
Difficulty: Medium
Goal: 1
75. For which independent variable does a unit change have the least effect on GPA?
___________________
Answer: high school average X 3
Difficulty: Medium
Goal: 1
76. For which independent variable does a unit change have the greatest effect on the GPA?
________________
Answer: hours spent studying per week X 2
Difficulty: Medium
Goal: 1
77. How many dependent variables are in the regression equation? ___
Answer: one
Difficulty: Medium
Goal: 1
78. How will a student's GPA be affected if an additional hour is spent studying each weeknight?
________
Answer: increases by 0.535
Difficulty: Medium
Goal: 1
Multiple Choice

Use the following to answer questions 79-87:

Twenty-one executives in a large corporation were randomly selected for a study to determine the effect
of several factors on annual salary (expressed in $000's). The factors selected were age, seniority, years
of college, number of company divisions they had been exposed to and the level of their responsibility. A
regression analysis was performed using a popular spreadsheet program with the following regression
output:

C o n s ta n t
S td E rro r o f Y e s tim a te
2
R
N o . o f O b s e rv a tio n s
D e g re e s o f F re e d o m
X C o e ffic ie n ts
S td E rr o f C o e f

249

2 3 .0 0 3 7 1
2 .9 1 9 3 3
0 .9 1 4 0 4
21
15
A ge
0 .0 3 1
0 .1 8 3

Sen
0 .3 8 1
0 .1 5 8

Educ
1 .4 5 2
0 .3 8 7

# o f D iv
0 .0 8 9
0 .5 4 1

L evel
3 .5 5 4
0 .8 3 3

Test Bank, Chapter 14

79. Which one of the following is the dependent variable?

A) Age
B) Seniority
C) Level of responsibility
D) Annual salary
E) Experience in number of company divisions
Answer: D
Difficulty: Medium
Goal: 1
AACSB: AS
Fill-in-the-Blank

80. Write out the multiple regression equation. _______________________

Answer: Y 23.004 0.031X 1 0.381X 2 1.452 X 3. 0.089 X 4 3.554 X 5

Difficulty:

Medium
Goal: 1
Refer To: 14_03
81. Which of the following has the most influence on salary -- 20 years of seniority, 5 years of college or
attaining 55 years of age? _______
Answer: 20 years of seniority
Difficulty: Medium
Goal: 3
AACSB: AS
82. If the other variables are held constant, how does an increase of one level of responsibility affect
salary? ___________
Answer: +$3,554
Difficulty: Medium
Goal: 1
83. If other variables are held constant, how does an increase in age of two years affect salary?
_________________
Answer: -$62
Difficulty: Medium
Goal: 1
84. What proportion of the total variation in salary is accounted for by the set of independent variables?
___________
Answer: 91.4%
Difficulty: Medium
Goal: 3
85. What is the value of the denominator in the calculation of the multiple standard error of estimate?
___________
Answer: 15
Difficulty: Hard
Goal: 3
86. Test the hypothesis that the regression coefficient for age is equal to 0 at the 0.05 significance level.
___________
Answer: d.f. = 15, t = - 0.238, t-critical = 2.131, fail to reject.
Difficulty: Hard
Goal: 5

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87. Test the hypothesis that the regression coefficient for education is equal to 0 at the 0.05 significance
level. ___________
Answer: d.f. = 15, t = 3.752, t-critical = 2.131, reject the null hypothesis and conclude that
education and salary are significantly related.
Difficulty: Hard
Goal: 5
Use the following to answer questions 88-93:
The production of automobile tires in any given year is related to the number of automobiles produced
this year and in prior years. Suppose our econometric model resulted in the following data.

X 1 = A u to m
X 2 = A u to m
X 3 = A u to m
X 4 = A u to m
X 5 = A u to m
C o n s ta n t
M u ltip le R

o b ile s
o b ile s
o b ile s
o b ile s
o b ile s

p ro d u c e d
p ro d u c e d
p ro d u c e d
p ro d u c e d
p ro d u c e d

th is y e a r
la s t y e a r
2 y e a rs a g o
3 y e a rs a g o
4 y e a rs a g o

C oef
5 .0 0
0 .2 5
0 .6 7
2 .1 2
3 .4 4
5 0 ,0 0 0
0 .8 3

t-ra tio
1 0 .4
0 .6
1 .4
2 .7
6 .5

88. Which variable in the model is the most significant predictor of tire production? __________
Difficulty: Medium
Goal: 5

Answer: X 1

89. What is the proportion of variation in tires produced by our predictor variables in the model?
________
Answer: 0.69
Difficulty: Medium
Goal: 3
90. Which variable in the model is the least significant in predicting tire production? _________
Difficulty: Medium
Goal: 5

Answer: X 2

91. What is the equation for our model? ____________________________

Answer: number of tires produced = - 50,000 5.00 X 1 0.25 X 2 0.67 X 3 2.12 X 4 3.44 X 5
Difficulty: Medium
Goal: 1
92. How much does tire production increase for every thousand cars produced two years ago? _____
Answer: 670
Difficulty: Medium
Goal: 1
93. How much does tire production change for every thousand cars produced three years ago? _____
Difficulty: Medium
Goal: 1

Answer: 2,120

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Use the following to answer questions 94-100:

A real estate agent developed a model to relate a house's selling price (Y) to the area of floor space (X) and
the area of floor space squared X 2 . The multiple regression equation for this model is:

Y 125 3 X X
where: Y = selling price (times $1000)
2

X = square feet of floor space (times 100)

94. What is the intercept (a)? _____________

Answer: $125 (in thousands)
Difficulty: Medium

Goal: 1

95. What is the selling price of a house with 1000 square feet? ______
Answer: $195,000
Difficulty: Medium
Goal: 1
96. What is the selling price of a house with 1500 square feet? ______
Answer: $305,000
Difficulty: Medium
Goal: 1
97. What is the selling price of a house with 2000 square feet? ______
Answer: $465,000
Difficulty: Medium
Goal: 1
98. What is the difference in selling prices of a house with 1600 square feet and one with 1700 square
feet? ______
Answer: $30,000 ($363,000 - $333,000)
Difficulty: Hard
Goal: 1
99. What is the difference in selling prices of a house with 1700 square feet and one with 1800 square
feet? ______
Answer: $32,000 ($395,000 - $363,000)
Difficulty: Hard
Goal: 1
100. What is the difference in selling prices of a house with 1650 square feet and one with 1750 square
feet? ______
Answer: $31,000 ($378,750 - $347,750)
Difficulty: Hard
Goal: 1

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Multiple Choice

Use the following to answer questions 101-106:

A manager at a local bank analyzed the relationship between monthly salary and three independent
variables: length of service (measured in months), gender ( 0 = female, 1 = male) and job type (0 =
clerical, 1 = technical). The following ANOVA summarizes the regression results:

A N O VA
R e g re s s io n
R e s id u a l
T o ta l
In te rc e p t
S e rv ic e
G ender
Job

df
3
26
29

SS
1 0 0 4 3 4 6 .7 7 1
1 4 6 1 1 3 4 .5 9 6
2 4 6 5 4 8 1 .3 6 7

M S
3 3 4 7 8 2 .2 5 7
5 6 1 9 7 .4 8 4 4 5

F
5 .9 6

C o e ffic ie n ts
7 8 4 .9 2
9 .1 9
2 2 2 .7 8
-2 8 .2 1

S ta n d a rd E rro r
3 2 2 .2 5
3 .2 0
8 9 .0 0
8 9 .6 1

t S ta t
2 .4 4
2 .8 7
2 .5 0
- 0 .3 1

P -v a lu e
0 .0 2
0 .0 1
0 .0 2
0 .7 6

101. Based on the ANOVA and a 0.05 significance level, the global null hypothesis test of the multiple
regression model
A) Will be rejected and conclude that monthly salary is related to all of the independent variables
B) Will be rejected and conclude that monthly salary is related to at least one of the independent
variables.
C) Will not be rejected.
D) Will show a high multiple coefficient of determination
Answer: B
Difficulty: Medium
Goal: 4
102. Based on the ANOVA, the multiple coefficient of determination is
A) 5.957%
B) 59.3%
C) 40.7%
D) cannot be computed
Answer: C
Difficulty: Medium
Goal: 3
103. Based on the hypothesis tests for the individual regression coefficients,
A) All the regression coefficients are not equal to zero.
B) "job" is the only significant variable in the model
C) Only months of service and gender are significantly related to monthly salary.
D) "service" is the only significant variable in the model
Answer: C
Difficulty: Medium
Goal: 5

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104. In the regression model, which of the following are dummy variables?
A) Intercept
B) Service
C) Service and gender
D) Gender and job
E) Service, gender, and job
Answer: D
Difficulty: Easy
Goal: 8
AACSB: AS
105. The results for the variable gender show that
A) males average $222.78 more than females in monthly salary
B) females average $222.78 more than males in monthly salary
C) gender is not related to monthly salary
D) Gender and months of service are correlated.
Answer: A
Difficulty: Medium Goal: 8
106. Based on the hypothesis tests for individual regression coefficients,
A) All regression coefficients should remain in the regression equation
B) Based on the standard errors, the variable, service, should not be included in the regression equation.
C) Based on the p-values, the variable, job, should not be included in the regression equation.
D) The relationship between monthly salary and gender is linear.
Answer: C
Difficulty: Medium Goal 9
AACSB: AS
Essay
107. What are the five assumptions of linear multiple regression?
Answer: 1) A linear relationship between the dependent variable and the independent variables, 2) the
variation of the residuals is the same for small and large values of Y , 3) the residuals are normally
distributed, 4) the independent variables should not be correlated, 5) The residuals are independent.
Difficulty: Easy
Goal: 6
108. How are scatter diagrams used to evaluate the assumptions of linear regression?
Answer: A scatter diagram can be used to evaluate the assumption of linearity. For each independent
variable, the dependent variable can be plotted against the independent variable. These plots provide
evidence of linear relationships. Difficulty: Medium
Goal: 6
AACSB: CA
109. How are residual plots drawn and used to evaluate the assumptions of linear regression?
Answer: A residual plot graphs the residuals against the values of one of the independent variables. A
residual plot is graphed for each independent variable. To support the assumptions of equal variation for
small and large values of the independent variable, the points should be evenly distributed above and
below zero and evenly distributed over all values of the independent variable. Difficulty: Hard
Goal: 6

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254

110. What statistic is used to assess multicolinearity in multiple regression analysis?

Answer: Variance inflation factor (VIF)
Difficulty: Easy
Goal: 7
Fill-in-the-Blank

Use the following to answer questions 111-115:

It has been hypothesized that overall academic success for college freshmen as measured by grade point
average (GPA) is a function of IQ scores X 1 , hours spent studying each week X 2 , and one's high
school average X 3 . Suppose the regression equation is:

Y 6.9 0.055 X 1 0.107 X 2 0.0083 X 3. 0.0004 X 2 X 3

The multiple standard error is 6.313 and R2 = 0.826.

111. What is the predicted GPA for a student with an IQ of 108, 32 hours spent studying per week and a
high school average of 82? _____
Answer: 3.249
Difficulty: Medium
Goal: 10
112. What is the predicted GPA if the IQ is 108, the number of hours spent studying is 30, and the high
school average is 82? ______
Answer: 3.029
Difficulty: Medium
Goal: 10
113. Assuming other independent variables are held constant, what effect on the GPA will there be if the
numbers of hours spent studying per week increases from 32 to 36? ________
Answer: The answer depends on the value of hours studied per week
Difficulty: Hard
Goal:
10
114. How many independent variables are in the regression equation? ___
Difficulty: Hard
Goal: 10

Answer: four

115. How will a student's GPA be affected if the students high school average was 80 and an additional
hour is spent studying each weeknight? ________
Answer: increases by 0.551
Difficulty: Hard
Goal: 10

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Test Bank, Chapter 14