In specification analysis, assumptions related to residuals states must be

The correct answer is: independent.

Residuals are the differences between the observed values and the fitted values in a regression model. In specification analysis, we check the assumptions related to the residuals to make sure that the model is correctly specified. One of the assumptions is that the residuals are independent. This means that the residuals are not correlated with each other. If the residuals are correlated, it can affect the results of the regression model.

Here is a brief explanation of each option:

• A. Worst. This is not an assumption that is made in specification analysis.
• B. Independent. This is the correct answer. The residuals are assumed to be independent.
• C. Dependent. This is not an assumption that is made in specification analysis.
• D. Good. This is not an assumption that is made in specification analysis.

I hope this helps! Let me know if you have any other questions.