To the Internal Revenue Service (IRS), the reasonableness of total itemized deductions depends on the taxpayer’s adjusted gross income. Large deductions, which include charity and medical deductions, are more reasonable for taxpayers with large adjusted gross incomes. If a taxpayer claims larger than average itemized deductions for a given level of income, the chances of an IRS audit are increased. Data (in thousands of dollars) on Adjusted Gross Income (AGI) and the Reasonable Amount of Itemized Deductions (RAID) are as follows: AGI : 22, 27, 32, 48, 65, 85, 120 RAID : 9.6, 9.6, 10.1, 11.1, 13.5, 17.7, 25.5 Examine the attached printout and answer the following questions. The correct interpretation of the meaning of each of the coefficients in the linear model is: a. When AGI is zero, the RAID is $4680 in this linear model. Since x = 0 is not included in the sample values of the independent variable, this interpretation cannot be a meaningful one. For every one thousand dollar of the AGI, the RAID increases by $161 in this linear model. b. When AGI is zero, the RAID is $4680 in this linear model. For every one thousand dollar of the AGI, the RAID increases by $161 in this linear model. c. When AGI is zero, the RAID is $4680 on average in this linear model. Since x = 0 is not included in the sample values of the independent variable, this interpretation cannot be a meaningful one. For every increase of one thousand dollar in the AGI, the RAID increases by $161 on average in this linear model. d. When AGI is zero, the RAID is $468 on average in this linear model. Since x = 0 is not included in the sample values of the independent variable, this interpretation cannot be a meaningful one. For every increase of one dollar in the AGI, the RAID increases by $161 in this linear model. e. none of the above are correct interpretations. Which of the following is not an assumption in the linear regression analysis of question 12? a. The probability distribution of the errors associated with AGI and RAID is approximately normal. b. Population variances are equal. c. Errors are random and independent. d. Standard deviation of the errors is constant. e. Expected value of the errors is zero.
To the Internal Revenue Service (IRS), the reasonableness of total itemized deductions depends on the taxpayer’s adjusted gross income. Large deductions, which include charity and medical deductions, are more reasonable for taxpayers with large adjusted gross incomes. If a taxpayer claims larger than average itemized deductions for a given level of income, the chances of an IRS audit are increased. Data (in thousands of dollars) on Adjusted Gross Income (AGI) and the Reasonable Amount of Itemized Deductions (RAID) are as follows:
AGI : 22, 27, 32, 48, 65, 85, 120
RAID : 9.6, 9.6, 10.1, 11.1, 13.5, 17.7, 25.5
Examine the attached printout and answer the following questions.
The correct interpretation of the meaning of each of the coefficients in the linear model is:
| a. |
When AGI is zero, the RAID is $4680 in this linear model. Since x = 0 is not included in the sample values of the independent variable, this interpretation cannot be a meaningful one. For every one thousand dollar of the AGI, the RAID increases by $161 in this linear model. |
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| b. |
When AGI is zero, the RAID is $4680 in this linear model. For every one thousand dollar of the AGI, the RAID increases by $161 in this linear model. |
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| c. |
When AGI is zero, the RAID is $4680 on average in this linear model. Since x = 0 is not included in the sample values of the independent variable, this interpretation cannot be a meaningful one. For every increase of one thousand dollar in the AGI, the RAID increases by $161 on average in this linear model. |
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| d. |
When AGI is zero, the RAID is $468 on average in this linear model. Since x = 0 is not included in the sample values of the independent variable, this interpretation cannot be a meaningful one. For every increase of one dollar in the AGI, the RAID increases by $161 in this linear model. |
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| e. |
none of the above are correct interpretations. Which of the following is not an assumption in the linear
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