Suggested Answer:

(b)(i) For 42 observations, n =42, k' = 1, and significant level = 5%, the significant Durbin-Waston
         statistic dL is 1.46. Since the Durbin-Waston d statistic, 1.200, falls below dL, there is
         evidence of positive, first order autocorrelation.
 

   (ii) The large-sample normality test statistic is

        z = (n)1/2*p = (42)1/2*0.3128 = 2.027

        Therefore, reject the null hypothesis that p = 0