Mathematics · Linear Regression
An analyst considers standardized values of observations on three variables: consumption (C), saving (S), and total income (TI) so that they have zero means and unit variances. She further considers disposable income (DI) where DI = C + S. In the simple linear regressions of DI on TI, DI on C, and S on TI, the regression coefficients are 0.8, 0.5, and 0.4, respectively. There are 21 sample observations. Sample covariances and variances are calculated with divisor 20. Then, the value of the sum of squared residuals in the regression of DI on S is:
- 120
- 215✓
- 310
- 45
Correct answer
15
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