1. You test for serial correlation, at the .05 level, with 61 residuals from a regression with one independent variable. If the calculated Durbin-Watson statistic is equal to 1.6, what is your conclusion?

2. Suggest ways to solve the problem of serial correlation.

3. What are the predictor variables in an autoregressive model?

Indicate whether each of the following statements describes a stationary or a nonstationary series.

a. A series that has a trend

b. A series whose mean and variance remain constant over time

c. A series whose mean value is changing over time

d. A series that contains no growth or decline