To compare one value measured at one point in time with other values measured at different points in time, index numbers must be used.
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Q. 2If two variables are uncorrelated, the sample correlation coefficient will be r = 0.00.
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Q. 3Stock analysts have recently stated in a meeting on Wall Street that over the past 50 years there have been periods of high market prices followed by periods of lower prices but over time prices have moved upwards.
Given their statement, stock prices most likely exhibit only trend and cyclical components. Indicate whether the statement is true or false
Q. 4In conducting a hypothesis test on the correlation between a pair of variables, we assume that each variable is normally and independently distributed.
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Q. 5In order to identify a cyclical component in time-series data, one year of weekly data should be sufficient.
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Q. 6The fact that teachers' salaries in Wisconsin are correlated with egg prices in Texas means that the two variables are spuriously correlated since a change in one variable could not cause the change in the other.
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Q. 7A major car magazine has recently collected data on 30 leading cars in the U.S. market. It is interested in building a multiple regression model to explain the variation in highway miles.
The following correlation matrix has been computed from the data collected:
mileage,
highway mileage, city Curb Weight cylinders Horsepower
mileage, highway 1
mileage, city 0.857550598 1
Curb Weight -0.739110566 -0.70765104 1
cylinders -0.694837149 -0.866135056 0.596475711 1
Horsepower -0.549172956 -0.684199197 0.293202385 0.840347219 1
Based on this information, if we test using a 0.05 level of significance, the critical value for testing whether any of the independent variables are significantly correlated with the dependent variable is t = 2.0484.
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