# Exam2_FC - The flashcards are formatted for printing...

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F(x) Y

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Dependent, explained, or response variable. Independent, explanatory, or predictor variable.
A B

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Slope coefficient. Y-intercept (constant).
Y Y i

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Actual observation, usually obtained from a sample. Forecasted (expected) value.
Zero - Yi Y

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Residual error ( ei ): Sum of residual values.
Normalization Minimum Value

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The sum of residual values squared. Compare two dissimilar things (i.e. liters to pounds).
Residuals Least Squares

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= ei 0 and = ei2 MIN Believed to be caused by omitted variables.
Predictability Residuals

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Measures outside influence or unpredictability to the model. Becomes smaller as the residuals become bigger
Sum of Squares Due to Error (SSE) Sum of Squares Due to Error (SSE)

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Measures the changes in Y caused by variables omitted from the model; measures the unpredictability of the model. ei2
Sum of Squares Total (SST) Sum of Squares Regression (SSR)

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Measures the changes in Y caused by variables within the model; measures the predictability of the model. Measures all changes in Y regardless of the cause.
SSR; SSE SSR + SSE

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SST equation. ____ are variables within the model and ____ are variables outside the model.
Coefficient of Determination = R2 SSRSST

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Coefficient of Determination: Answers the question, how predictable is the model?
SSR = SST; SSE = 0 SSR = 0; SST = SSE

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explanation lies outside the model. All explanation to the
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## This note was uploaded on 09/08/2011 for the course ECO 3411 taught by Professor Staff during the Fall '08 term at University of Central Florida.

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Exam2_FC - The flashcards are formatted for printing...

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