CH 11 Test

Chapter 11 Multiple Regression
True/False Questions
1. In regression analysis, every time that an insignificant and unimportant variable is

added to the regression model, the R2 decreases.
Answer: False Type: Concept Difficulty: Medium
2. The more variables that are added to the regression model, the better the model will fit
the data.
Answer: False Type: Concept Difficulty: Easy
3. In multiple regression there is no need to consider the F-test, only the t-tests are
important.
4. Using multiple regression to regress five independent variables to predict y will give
the same result as five separate regressions of y versus each independent variable.
5. The degrees of freedom for error in the multiple regression model are: n - (k + 1).
Answer: True Type: Concept Difficulty: Easy
6. In a multiple regression model which has k variables, there are k + 1 parameters to be

estimated.
7. The multiple regression model is an extension of the simple regression model,

involving more than two dependent variables.
8. The multiple regression model assumptions for e, the error term, are the same as for
the simple linear regression model.
Aczel, Complete Business Statistics, Sixth Edition 1

9. When k = 2 variables, the graph of the model is a plane in three dimensions, rather
than a straight line as in the case when k = 1.
10. The symbol for the y-intercept in the multiple regression model is b0.
11. If H0: b1 = b2 = b3 . . = bk =0 is rejected, then we can conclude that there is no linear

relationship between y and any of the k independent variables in the model.
12. The F-test of the ANOVA used in multiple regression is not equivalent to the t-test for
the significance of the slope parameter used in simple linear regression.
Answer: True Type: Concept Difficulty: Medium
13. In testing for the existence of a linear relationship between y and any k variables, if the
p-value for this test is 0.0001, then the null hypothesis is rejected.
14. If H0: b1 = b2 = b3 =0 is rejected, then we know that there is a regression relationship

between all three variables and y.
15. The Mean Square Error, or MSE, is a biased estimator for the variance of the
population of errors, e, denoted by s2.
16. The square root of the MSE is the standard error of the estimate.
17. The adjusted multiple coefficient of determination always increases as new variables
are added to the model, just as R2 does.
2 Aczel, Complete Business Statistics, Sixth Edition


18. The adjusted multiple coefficient of determination is the R2 with both SSE and SST
divided by their degrees of freedom.
19. When carrying out individual t-tests on each of the variables in the multiple regression
model, each test is independent of each other test.
20. When independent variables are correlated with each other, multicollinearity is
present.
21. Multicollinearity may cause the signs of some estimated regression parameters to be
the opposite of what we would expect.
22. When using qualitative variables, we use an indicator variable for each of the r
variables in the model.
23. When the adjusted coefficient of determination decreases when a term is included in
the multiple regression model, then that term should be retained in the model.
24. A multiple regression model should be as parsimonious as possible.
25. When powers of the variables are used in the model, a linear model is no longer
appropriate.
26. Inflated values of variances and standard errors of regression coefficient estimators
may be a sign of multicollinearity.


27. Removing collinear variables from a regression model is the easiest way of solving
problems of multicollinearity.
28. The test to check for first-order autocorrelation is the Durbin-Watson test.
29. Multiple regression uses one independent variable.
30. There are no mathematical limitations on the number of independent variables in a

multiple regression model.
Multiple Choice Questions
31. In a multiple regression analysis with n = 15 and k = 14, the computer reports R2
0.9999.
A) this is an excellent regression
B) this is a very good regression
C) this is an average regression
D) this is not a good regression
E) not enough information to determine
Answer: D Type: Concept Difficulty: Medium
32. In multiple regression analysis, R2 = 0.02, n = 2,000, k = 5 and F = 11.2.

A) multicollinearity is present
B) none of the five variables are statistically significant
C) this regression is excellent for prediction purposes
D) there is some evidence of a linear relationship between y and at least some of the
x- variables, but the regression is extremely weak and useless for prediction
purposes.
E) not enough information to make any conclusions
Answer: D Type: Concept Difficulty: Easy

33. In a multiple regression analysis, MSE = 20, n = 54, k = 3, and SST(total) = 2,000.
What is the R2 of the regression?
A) 0.0
B) 0.01
C) 0.99
D) 1.00
E) 0.50
Answer: E Type: Computation Difficulty: Medium
34. The surface hyperplane of the linear regression of y on five independent variables is of
the dimension:
A) 2
B) 3
C) 4
D) 5
E) none of the above
35. Suppose that in a multiple regression the F is significant, but none of the t-ratios are
significant. This means that:
A) multicollinearity may be present
B) autocorrelation may be present
C) the regression is good
D) a nonlinear model would be a better fit
Answer: A Type: Concept Difficulty: Medium
36. Which of the following represents a net regression coefficient?

A) e
B) R2
C) R
D) b1

37. How many degrees of freedom for error are associated with a multiple regression
model with k independent variables?
A) n - (k + 1)
B) n - k
C) n - 1
D) n - k + 1
Answer: A Type: Concept Difficulty: Easy
38. The F ratio used to test for the existence of' a linear relationship between the
dependent variable and any independent variable is:
A) MSE/(n-(k + l))
B) MSR/MSE
C) MSR/MST
D) MSE/MSR
Answer: B Type: Concept Difficulty: Medium
39. When the null hypothesis, H0: b1 = b2 = b3 = 0, is rejected, the interpretation should
be:
A) there is no linear relationship between y and any of the three independent variables
B) there is a regression relationship between y and at least one of the three
independent variables
C) all three independent variables have a slope of zero
D) all three independent variables have equal slopes
E) there is a regression relationship between y and all three independent variables
40. In testing H0: b1 = b2 = b3 . . = bk = 0, a p-value of 0.0001, would give an indication

that:
A) the null hypothesis should not be rejected
B) the null hypothesis should be rejected
C) all three independent variables have a slope of zero
D) there is no linear relationship between y and any of the three independent variables

41. Consider the following multiple regression model, with n = 25:
y = 5 + 10x1 + 20x2.
R2 = 0.90 Sb1 = 3.2 sb2 = 5.5
Calculate the t-test statistic to test whether x1 contributes information to the prediction
of y.
A) 0.32
B) 3.636
C) 3.125
D) 2.8125
E) 11.11
Answer: C Type: Computation Difficulty: Medium
Use the following to answer questions 42-47:
The following data gives the monthly sales (in thousands of dollars) for different advertising
expenditures (also in thousands of dollars) and sales commission percentages.
S a le s 245 138 352 322 228 275 560 366

A d v e rtis in g 1 6 .5 18 2 2 .3 1 7 .4 19 20 32 1 8 .6
C o m m is s io n 1 0 .5 2 4 3 .5 4 .5 1 .8 9 8 .5
42. What amount of sales would this model predict for advertising expenditures of 25,000
and sales commission of 8%?
A) $564,318
B) $30,273.6
C) $561,734
D) $72,880
Answer: A Type: Computation Difficulty: Medium

43. Write the null and alternative hypotheses to test whether or not advertising
expenditures and sales commissions can be used to predict sales.
A) H0: b1 = b2 = 0; H1: at least one coefficient is not zero
B) H0: b1 b2 = 0; H1: b1 = b2
C) H0: b1 and b2 are not equal to zero; H0: b1 = b2 = 0
D) H0: b1 b2; H1: b1 < b2
44. At the 5% level of significance, is either advertising expenditure or sales commission

percentage or both significant?
A) only advertising expenditures
B) both are significant
C) only sales commission percentage
D) neither are significant
E) insufficient information to determine
45. What is the difference between R2 and the adjusted R2?

A) the adjusted R2 always increases as more independent variables are added to the
model
B) the adjusted R2 is smaller in this case because the constant term is negative
C) the adjusted R2 adjusts explanatory power by the degrees of freedom
D) the adjusted R2 is always smaller than R2
E) the adjusted R2 adjusts explanatory power by division by the standard error of
each coefficient
Answer: C Type: Concept Difficulty: Medium
46. What is the value of the standard error of the estimate?

A) MSE = 4822.64
B) s = 69.44
C) MSR = 42592
D) stdev = 119.0
E) not given in the above table of information
Answer: B Type: Computation Difficulty: Medium

47. The degrees of freedom for error, for this regression model are:
A) 2
B) 5
C) 24
D) 8
Eight students are selected randomly and their present graduate GPA is compared to their
undergraduate GPA and scores on standardized tests.
The data are shown below:
P re se n t G P A 3 .8 9 3 .0 3 3 .3 4 3 .8 5 3 .9 3 3 .0 6 3 .6 9 3 .9 1
U n d e rg r G P A 3 .7 7 2 .7 5 3 .1 1 3 .7 5 4 .0 0 2 .9 2 3 .7 0 3 .8 8
S td . S c o re s 700 460 550 690 720 420 670 670
The Minitab regression analysis follows:
P r e d ic to r C oef S td e v t-r a tio p

C o n s ta n t 1 .1 0 6 6 0 .2 0 5 9 5 .3 7 0 .0 0 3
U n d erg r G P A 0 .4 7 7 5 0 .1 6 3 0 2 .9 3 0 .0 3 3
S td . S c o re s 0 .0 0 1 3 3 9 2 0 .0 0 0 6 6 9 3 2 .0 0 0 .1 0 2
Analysis of Variance
S o u rce D F SS M S F P
R e g re s s io n 2 1 .0 2 7 5 1 0 .5 1 3 7 5 1 7 0 .7 7 0 .0 0 0
E rro r 5 0 .0 1 5 0 4 0 .0 0 3 0 1
T o ta l 7 1 .0 4 2 5 5

48. Write the regression equation, letting undergraduate GPA be variable 1 and standard
scores be variable 2.
A) y = 0.4775 x1 + 0.0013392x2
B) y = 0.2059 + 0.1630x1 + 0.0006693x2
C) none of the others is correct
D) y = 1.1066 + 0.4775x1 + 0.0013392x2
E) not enough information given
Answer: D Type: Computation Difficulty: Medium
49. At the 5% level of significance, are undergraduate scores and standard scores
significant?
A) both are significant
B) neither are significant
C) only undergraduate GPA is significant
D) only standard scores are significant
E) not enough information to determine
50. Compute R2.

A) 99.4%
B) 98.6%
C) 20.8%
D) very close to 100%
E) insufficient information to determine
Answer: B Type: Computation Difficulty: Hard
51. What is the relationship between R2 and the adjusted R2 for this regression model?
A) both are exactly the same
B) the adjusted R2 is larger than R2
C) the adjusted R2 is smaller than R2
D) both are very small
Answer: C Type: Computation Difficulty: Hard

52. What does the F value of 170.77 indicate in this model?

A) there is no evidence of any linear relationship between y and the two independent
variables
B) there is evidence of a linear relationship between y and at least one of the two
independent variables
C) the coefficients of both variables are equal to zero
D) there is evidence that both variables contribute information to the prediction of y
Answer: B Type: Concept Difficulty: Hard
53. All of the following are possible effects of multicollinearity EXCEPT:

A) the variances of regression coefficients estimators may be larger than expected
B) the signs of the regression coefficients may be opposite of what is expected
C) a significant F ratio may result even though the t ratios are not significant
D) removal of one data point may cause large changes in the coefficient estimates
E) the VIF is zero
Answer: E Type: Concept Difficulty: Hard
54. Correlation of the values of variables with values of the same variables lagged one or
more time periods back is called:
A) multicollinearity
B) a transformation
C) autocorrelation
D) variance inflation
E) interaction
55. An extreme observation:

A) almost always represents an error in data collection
B) never affects the analysis
C) always causes the R2 to be inflated
D) should always be omitted from analysis of the data
E) is an outlier
Answer: E Type: Concept Difficulty: Easy

56. Dummy variables are used when:

A) qualitative variables are involved in the model
B) quantitative variables are involved in the model
C) doing residual analysis
D) making transformations of quantitative variables
57. All of the following are possible non-linear transformations, EXCEPT:

A) logarithmic transformation
B) multiplicative model
C) exponential model
D) reciprocal model
E) interactive model
Answer: E Type: Concept Difficulty: Medium
58. A dummy variable:

A) can only assume values of 1 or 0.
B) is used as an independent variable.
C) is an indicator variable.
D) all of the above.
59. What is a residual?

A) Equal to R.
B) Equal to R2.
C) The dependent variable.
D) The independent variable.
E) The difference between the observed and predicted value, if the dependent
variable.
Answer: E Type: Concept Difficulty: Easy
60. What does a correlation matrix show?

A) Residuals.
B) Regression coefficients.
C) The correlation coefficients between all of the independent variables.
D) Both A and B, above.
Answer: C Type: Concept Difficulty: Easy


61. When independent variables are correlated, you have:

A) Multicollinearilty.
B) Homoscedasticity.
C) Autocorrelation.
D) Residuals.
62. When successive residuals are correlated you have:

A) Multicollinearilty.
B) Homoscedasticity.
C) Autocorrelation.
D) Residuals.
63. A multiple regression model with two independent variables exhibits a highly
significant F-ratio, but each variable's individual t-statistic is insignificant. The most
likely cause of such a situation is ____________
A) Heteroskedasticity
B) Homoskedasticity
C) Multicollinearity
D) Non-independence of residuals
E) Non-normality of residuals
64. As more independent variables are added to a multiple regression model,

___________ will increase; this is not always so with ___________, which will only
increase if the additional variables add substantial explanatory power to the model.
A) R2; adjusted R2
B) adjusted R2; R2
C) R2; the coefficient of partial determination
D) adjusted R2; the coefficient of multiple determination
E) the standard error of the estimate; R2

65. In previous studies a market researcher has observed a significant positive relationship
between advertising expenditures and sales for a firm's 40 territories. In a recent
iteration of her study, however, she added to her model an additional independent
variable, one that tends to be highly correlated with advertising expenditures. Which
of the following is NOT a possible result of this addition?
A) Advertising expenditures will exhibit a negative relationship with sales
B) The relationship between advertising expenditures and sales will be insignificant
C) The model's overall F-ratio will increase
D) The model's coefficient of multiple determination (R2) will decrease
E) All of the above are possible results of this addition
Answer: D Type: Concept Difficulty: Medium
In a multiple regression study based on 24 observations, the following results were observed:
C o e ffic ie n t E s tim a te S ta n d a r d E r ro r
B0 3 5 .2 1 4 .5 3
B1 2 3 .0 2 1 2 .0 2
B2 1 3 .0 5 6 .2 6
B3 -2 .4 5 0 .3 8
66. If a is set at 0.05, what is the critical value for the test statistic in a test of H0: bi = 0 in
this situation?
A) Z = 1.96
B) Z = 1.645
C) t = 2.086
D) t = 2.064
E) t = 1.725
Answer: C Type: Computation Difficulty: Medium
67. Assuming that there are no problems with multicollinearity, which of the independent
variables appear to be useful or important in explaining the dependent variable?
A) Variable 1
B) Variable 2
C) Variable 3
D) Variable 1 and Variable 2
E) Variable 2 and Variable 3
Answer: E Type: Computation Difficulty: Medium


68. Assuming that all variables were determined to be useful, what would the predicted
value of Y be if X1 = 3, X2 = 16 and X3 = 4.8?
A) 301.31
B) 266.10
C) 191.62
D) 142.57
E) 138.04
Answer: B Type: Computation Difficulty: Easy
A multiple regression analysis has been done on 24 observations, with the following partial
ANOVA table resulting:
S o u rc e d .f . SS
R e g re s s io n ** 7 8 .3 1 2
E rro r 20 **
T o ta l ** 1 4 8 .0 2 8
69. How many independent variables were included in this regression analysis?
A) 2
B) 3
C) 4
D) 5
E) 6
70. What is adjusted R2 for this regression analysis?

A) 0.963
B) 0.693
C) 0.529
D) 0.458
E) 0.412
Answer: D Type: Computation Difficulty: Hard

Short Answer Questions
71. A simple linear regression model, developed with 11 observations, exhibits an R2 of

0.965. Adding an additional variable to the model increases R2 to 0.966. Has the
addition of the second independent variable been useful in this situation?
Answer: Not really, since adjusted R2 falls to 0.958. In essence, the additional variable
adds little or no predictive power.
A multiple regression analysis has been done on 24 observations, with the following partial
ANOVA table resulting:
S o u rc e d .f. SS M S
R e g re s s io n 3 1 9 2 1 .5 4 3 **
E rro r ** ** 1 6 8 .0 5 1 4
T o ta l ** **
72. Do these results provide sufficient evidence (assume a = 0.05) of a regression

relationship between the independent variables and the dependent variable?
Answer: Yes. With a = 0.05, the critical value for the F-ratio with 3 numerator d.f. and
20 denominator d.f. is 3.10. The observed F-ratio is 3.81142. There appears to be a
significant regression relationship between the independent variables and the
dependent variable.
73. How effective in predicting the dependent variable is the regression model that has
been developed in this situation.
Answer: Despite its significant F-ratio, the regression model developed is not very
effective at explaining variability in the dependent variable, since adjusted R2 is only
0.268.

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Chapter 11 Multiple Regression

1. In regression analysis, every time that an insignificant and unimportant variable is

Answer: False Type: Concept Difficulty: Medium

Answer: False Type: Concept Difficulty: Easy

Answer: False Type: Concept Difficulty: Medium

Answer: False Type: Concept Difficulty: Medium

Answer: True Type: Concept Difficulty: Easy

6. In a multiple regression model which has k variables, there are k + 1 parameters to be

Answer: True Type: Concept Difficulty: Easy

7. The multiple regression model is an extension of the simple regression model,

Answer: False Type: Concept Difficulty: Easy

Answer: True Type: Concept Difficulty: Easy

Aczel, Complete Business Statistics, Sixth Edition 1

Answer: True Type: Concept Difficulty: Easy

Answer: True Type: Concept Difficulty: Easy

11. If H0: b1 = b2 = b3 . . = bk =0 is rejected, then we can conclude that there is no linear

Answer: False Type: Concept Difficulty: Medium

Answer: True Type: Concept Difficulty: Medium

Answer: True Type: Concept Difficulty: Medium

14. If H0: b1 = b2 = b3 =0 is rejected, then we know that there is a regression relationship

Answer: False Type: Concept Difficulty: Medium

Answer: False Type: Concept Difficulty: Medium

Answer: True Type: Concept Difficulty: Medium

Answer: False Type: Concept Difficulty: Medium

2 Aczel, Complete Business Statistics, Sixth Edition

Aczel, Complete Business Statistics, Sixth Edition 3

Answer: True Type: Concept Difficulty: Medium

Answer: False Type: Concept Difficulty: Medium

Answer: True Type: Concept Difficulty: Easy

Answer: True Type: Concept Difficulty: Medium

Answer: False Type: Concept Difficulty: Medium

Answer: False Type: Concept Difficulty: Medium

24. A multiple regression model should be as parsimonious as possible.

Answer: True Type: Concept Difficulty: Medium

Answer: False Type: Concept Difficulty: Medium

Answer: True Type: Concept Difficulty: Medium

4 Aczel, Complete Business Statistics, Sixth Edition

Aczel, Complete Business Statistics, Sixth Edition 5

Answer: True Type: Concept Difficulty: Easy

Answer: True Type: Concept Difficulty: Easy

29. Multiple regression uses one independent variable.

Answer: False Type: Concept Difficulty: Easy

30. There are no mathematical limitations on the number of independent variables in a

Answer: True Type: Concept Difficulty: Easy

Multiple Choice Questions

Answer: D Type: Concept Difficulty: Medium

32. In multiple regression analysis, R2 = 0.02, n = 2,000, k = 5 and F = 11.2.

Answer: D Type: Concept Difficulty: Easy

6 Aczel, Complete Business Statistics, Sixth Edition

Answer: E Type: Computation Difficulty: Medium

Answer: D Type: Concept Difficulty: Easy

Answer: A Type: Concept Difficulty: Medium

36. Which of the following represents a net regression coefficient?

Answer: D Type: Concept Difficulty: Easy

Aczel, Complete Business Statistics, Sixth Edition 7

Answer: A Type: Concept Difficulty: Easy

Answer: B Type: Concept Difficulty: Medium

Answer: B Type: Concept Difficulty: Medium