Question 4 (a) Consider the following regression. se Traffic in city=0.04 +0.2 Vehicles +0.4 Pop - 0.08 Petrol + 0.05 Gas = (0.03) (-0.17) (0.3) (-0.1) (-0.04) n= 20 R2 = 0.96 Where; Vehicles = number of vehicles in city Pop. = population Petrol = petrol price Gasmuo gas price (i) Can you detect any abnormality with the results? What is it? How do you know that? (7 marks) (ii) What is the reason for the preceding problem detected above? What do you propose to rectify the issue? (6 marks) (b) Consider following regression. = 8.04 + 5.04 S Equation 1 t= (8.03) n=60, R2 = 0.72 , DW=0.32 (8 marks) (i) Test the model at 5% for autocorrelation using DW test. (ii) If we now estimate equation using log form, we obtain: Ln..=0.04 +1.5 In.S Equation 2 t= (10.2) n=60, R2 = 0.95, DW=1.72 Compare the equation (2) with equation (1). Which equation do you prefer? Why? (4 marks) Total : 25 Marks Question 4 (a) Consider the following regression. se Traffic in city=0.04 +0.2 Vehicles +0.4 Pop - 0.08 Petrol + 0.05 Gas = (0.03) (-0.17) (0.3) (-0.1) (-0.04) n= 20 R2 = 0.96 Where; Vehicles = number of vehicles in city Pop. = population Petrol = petrol price Gasmuo gas price (i) Can you detect any abnormality with the results? What is it? How do you know that? (7 marks) (ii) What is the reason for the preceding problem detected above? What do you propose to rectify the issue? (6 marks) (b) Consider following regression. = 8.04 + 5.04 S Equation 1 t= (8.03) n=60, R2 = 0.72 , DW=0.32 (8 marks) (i) Test the model at 5% for autocorrelation using DW test. (ii) If we now estimate equation using log form, we obtain: Ln..=0.04 +1.5 In.S Equation 2 t= (10.2) n=60, R2 = 0.95, DW=1.72 Compare the equation (2) with equation (1). Which equation do you prefer? Why? (4 marks) Total : 25 Marks