University of Central Florida (UCF) GEB4522 Data Driven Decision Making Practice Exam 2

The correct choice is that R-squared illustrates the goodness-of-fit of the regression model. R-squared, also known as the coefficient of determination, measures the proportion of variance in the dependent variable that can be explained by the independent variable(s) in the regression model. A higher R-squared value indicates that a larger proportion of the variance is accounted for by the model, suggesting a better fit to the data.

This information is crucial for evaluating how well the chosen model describes the relationship between the variables and how accurately it can predict future outcomes based on the input data. Essentially, it provides a quantitative metric that assists researchers and analysts in assessing the effectiveness of their models.

Understanding R-squared in this way is fundamental for anyone analyzing data, as it directly relates to the reliability and validity of conclusions drawn from the regression analysis. It is also important to note that while a higher R-squared value generally indicates a better fit, it does not alone imply that the model is appropriate or that the relationship is causal.