W2 Regression Analysis Single

Question 1

What is the difference between correlation and causation

Answer 1

Correlation between two factors may just be random/coincidence

Causation is correlation with a cause

Question 2

How is causation established

Answer 2

Logic and theory

Question 3

What is regression analysis

Answer 3

Questions if independent variables impact dependent variables

Question 4

What is the dependent variable Y

Answer 4

The variable we wish to predict (explain)

Question 5

What is the independent variable X

Answer 5

The variable used to predict (explain the dependent)

Question 6

What is simple linear regression

Answer 6

1 dependent variable
Linear relationship between X and Y
Changes in Y are related to changes in X

Question 7

Equation for simple linear regression

Answer 7

Y = B0 + B1X1 + e

Question 8

What is the B0 in the regression formula

Answer 8

Y intercept

Question 9

What is the B1 in the regression formula

Answer 9

The slope of the coefficient. Ie for each change in coefficient(independent variable) y will change by the slope

Question 10

Example of a positive linear relationship

Answer 10

Number of customers signed up to the emailing list and number of total sales

Question 11

Example of negative linear relationship

Answer 11

Demand curve

Question 12

Example of positive curvilinear relationship

Answer 12

Age and maintenance costs of a washing machine, it rises fast but eventually plateaus

Question 13

Example of a u shaped relationship

Answer 13

Entrepreneurial activity and GDP per capita

Entrepreneurial activity occurs must in high end and low end GDP countries

Question 14

Example of exponential relationship

Answer 14

Value of car and its age

Question 15

Interpret this equation for grades (dependent) and absences (independent)

Y = 85 - 5X

Answer 15

Y intercept is 85 meaning if a student has no absences, they’re grade should be 85%

The slope of the independent variable is -5 meaning that With each absence, their grade is predicted to fall by 5%

Question 16

Using the regression formula, how can you predict outcomes for specific values of the independent variable,s

Answer 16

Submitting them into the formula

Question 17

What does the coefficient of determination show us

Answer 17

How good is the regression

The proportion of the variable that is explained by variation in the independent variable

Question 18

What is the coefficient of determination also known as

Answer 18

R^2

Question 19

If r squared is closer to 1 does this mean it’s stringeror weaker

Answer 19

Stronger

Question 20

What are the assumptions of regression

Answer 20

Linear
Independent error values
Normally distributed error values
Equal variance

Question 21

How to check errors (residual analysis)

Answer 21

E = abs(predictedY - actualY)

Question 22

What is autocorrelation

Answer 22

Exists if residuals in one time period are related to residuals in another time period

Question 23

in regression how do you check normality assumption

Answer 23

the normal probability plot should be approximately linear

Question 24

what would show potential violation of assu,ptions om the equal variances plot

Answer 24

fan shape

Question 25

when is the independence plot important

Answer 25

in data with time

Question 26

what does a fan shaped residual mean

Answer 26

potential violation of equal variances assumption