Suppose an Economist Has Developed a Model for Forecasting Annual

Multiple Choice

Suppose an economist has developed a model for forecasting annual consumption, yt, as function of total labor income, x1t, and total property income, x2t based on 20 years on annual data. The following regression model has been developed: t= 7.81 + 0.91x1t + 0.57x2t with the standard error = 1.29 and the Durbin-Watson d statistic = 2.09. Using an alpha = .05, which of the following is the correct critical value for testing whether the residuals are autocorrelated?

A) 1.20 and 1.41
B) 1.10 and 1.54
C) 1.08 and 1.53
D) Can't be determined without seeing the residuals.