After a linear forecasting model is found for a time series,if the Durbin-Watson statistic is less than d_L this means that: A)no positive autocorrelation exists,the linear model is adequate. B)positive autocorrelation exists,a nonlinear model should be tried. C)no positive autocorrelation exists,a nonlinear model should be tried. D)positive autocorrelation exists,the linear model is adequate.

Question

Quizplus · Accepted Answer

A Durbin-Watson statistic less than the lower bound indicates positive autocorrelation in the residuals, which means that the linear model is not adequate and a nonlinear model should be tried. Choice A is incorrect because a Durbin-Watson statistic less than the lower bound indicates positive autocorrelation, not the absence of it. Choice C is incorrect because if there is no positive autocorrelation, there would be no reason to try a nonlinear model. Choice D is incorrect because positive autocorrelation in the residuals means that the linear model is not adequate, and thus it cannot be considered as adequate.

After a Linear Forecasting Model Is Found for a Time