When the level of investment expenditures of non-manufacturing firms in the US (denoted as Y), from 1960 to 1979, is regressed on the GNP (denoted as X 1 ), and the consumer price index (denoted as X...

When the level of investment expenditures of non-manufacturing firms in the US (denoted as Y),  from 1960 to 1979,  is regressed on the GNP (denoted as X₁), and the consumer price index (denoted as X₂), the following results are obtained:

           Y^{^}
_t   =  31.75 +  0.08 X_1t  - 0.58 X_2t        R²= 0.98

                                                 (6.08)         (3.08)
d = 0.77

Note: the numbers in parentheses represent t-ratios and d= Durbin-Watson statistic.

1. Which type of problem is existed in the model? Why is it a problem?


2. How can we detect this problem? How could it be corrected?