4. Multiple Regression

Question 1

What is multicollinearity?

Answer 1

When predictor variables correlate very highly with each other

Question 2

What graph tells us about Normality of residuals?

Answer 2

P-P plot

e.g.
The P-P plot shows up deviations from normality as deviations from the diagonal line. For our model, the dots lie almost exactly along the diagonal, which, as we know, indicates a normal distribution: hence this plot also suggests that the residuals are normally distributed

Question 3

What plot tells us about heteroscedasticity and linearity?

Answer 3

We can look for heteroscedasticity and non-linearity using a plot of standardized residuals against standardized predicted values

Question 4

T-statistic in regression

Answer 4

• The t-statistic tests whether the regression coefficient, b, is equal to 0.
• The t-statistic provides some idea of how well a predictor predicts the outcome variable.
• The t-statistic can be used to see whether a predictor variables makes a statistically significant contribution to the regression model.