Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Explain the Standard Error of the Regression & Measures of Fit?
Expert Solution
Step 1
Standard Error of the Regression
- The standard regression error is also known as the estimate's standard error.
- It basically reflects the mean distance from the regression line that the observed values fall off.
- This means that how far are the estimated values from the actual regression line is explained by the standard error of the regression.
- Thus, the lower the values of the standard error, the more likely it is that the estimated regression model is correct.
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