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For the Regression Model, Yi = B1X1i + B2X2i

Question 6

Multiple Choice

For the regression model, Yi = b1X1i + b2X2i + a + ei, consider the following two situations:
Situation 1: rY1 = ?0.5 rY2 = 0.8 r12 = 0.1
Situation 2: rY1 = 0.2 rY2 = 0.8 r12 = 0.1
In which of the two situations will R2 be larger?


A) Situation 1.
B) Situation 2.
C) R2 will be the same in both situations.
D) Uncertain.

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