Regression Diagnostics
Regression diagnostics include: residual plots (checking for patterns, outliers, heteroscedasticity), normal probability plots (checking normality of residuals), leverage plots (identifying influential points), and Cook's distance (measuring point influence).
Real World
Economists at the Bank of England use residual plots when modelling inflation against interest rates to check whether a linear model is appropriate before publishing forecasts.
Exam Focus
In 'comment on the suitability of the model' questions, refer specifically to whether the residual plot shows random scatter or a pattern.
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