Essay
Suppose that data on labour productivity and unit labour costs were obtained for the retail industry from 1995 through 2014. A regression was estimated to describe the linear relationship between the two variables.
a. Based on the plot of residuals versus predicted values, is the linear model appropriate? Explain. 
b. Would a re-expression of the data help? If so, what would you recommend?
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a. The residual plot shows a clear patte...View Answer
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