Q1: Why is R² a commonly used and perhaps better measure of how well a regression model fits the data than the residual sum of squares (RSS)?

(a) The RSS is often too large.

(b) The RSS does not depend on the scale of the dependent variable whereas the R² does.

(c) The RSS depends on the scale of the dependent variable whereas the R² does not.

(d) The RSS depends on the scale of the independent variable whereas the R² does not.

Q2: In the following regression estimated on 64 observations:

y_t = ₁ + ₂X_2,t + ₃X_3,t + ₄X_4,t + u_t

Which of the following null hypotheses could we test using an F-test?

i. ₂ = 0

ii. ₂ = 1 and ₃ + ₄ = 1

iii. ₃₄ = 1

iv. _{2 3 4} = 1

(a) (i) and (ii) only

(b) (ii) and (iv) only

(c) (i) and (iii) only

(d) (i), (ii), (iii), and (iv)

(e) (i), (ii), and (iv) only