Question

In a simple regression model with the sample size n=25, the value of the Durbin Watson statistic is equal to 0.81. Using α=0.05, we conclude that there is evidence that:

Select one:

a. The residuals are not normally distributed

b. The residuals are negatively autocorrelated

c. The residuals are positively autocorrelated

d. The assumption of homoskedasticity is violated

Answer 1

we know that ,the  Durbin Watson statistic is a test for autocorrelation in a data set.

Also we know that

i) The DW statistic always has a value between zero and 4.0.

ii) A value of 2.0 means there is no autocorrelation detected in the sample.

iii) Values from zero to 2.0 indicate positive autocorrelation and values from 2.0 to 4.0 indicate negative autocorrelation.

Here given that ,

n=25 ,significance level=0.05

And,  Durbin watson statistic is 0.81

Ans: C) Residuals are positively autocorrelated.