Question: What would be your answer to the following queries regarding multiple regression analysis?
(a) I am trying to find out why people go bankrupt. I have gathered data from a sample of people filing bankruptcy petitions. Will these data enable me to find answers to my question?
(b) I want to study the costs of auto accidents. I have collected data from a sample of police auto accident reports. Are these data adequate for my purpose?
(c) I am trying to estimate a consumption function and I suspect that the marginal propensity to consume varies inversely with the rate of interest. Do I run a multiple regression using income and interest rate as explanatory variables?
(d) I am fitting a demand for food function for a sample of 1000families. I obtain an R2 of only 0.05 but the regression program indicates that the F-statistic for the equation is very significant and so are the tstatistics. How can this be? Is there a mistake in the program?
(e) In the regression of Yon x and z, should I leave one of them out?
(f) I know that y depends linearly on x but I am not sure whether or not it also depends on another variable z, A friend of mine suggests that I should regress y on x first, calculate the residuals, and then see whether they are correlated with z. Is she correct?