These questions are to be answered True or False. No explanation is needed. If a

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These questions are to be answered True or False. No explanation is needed. If applicable, some questions refer to the following standard population regression model and OLS observations: sample regression line based off a dataset with n 500 1. In order for Bi to be an unbiased estimate of Bi the following must be true: 2. The dependent variable is y and the independent variables are x,, x2 and u. 3. Ifyou had data to estimate the model above, Bi would be unbiased if these 5 assumptions held: 1. 2. 3. 4. 5. Data is a random sample of the population The relationship is linear in parameters No perfect collinearity The expected value of the error term conditional on x1 and x2 is 0 The errors are homoskedastic 4. In the population model above, u is defined as the error term. 5. , and lies on the OLS regression line in the The sample means estimated model from above. 6. e that y is income and it is measured in dollars. If In the model above suppos y was measured instead in thousands of dollars, then the estimated coefficient of x, on y would be larger. The variance of the errors 2 is observable. 7. 8. 9. lfx2 2x1, we would still be able to estimate the model above. Ifx2 is a determinant of y, and x, and x2 are highly correlated but we dropped x2 from our model because of lack of data, the expected value of estimated parameter 1 from y-+ , + u would equal 1 10.The predicted values of y are always the same as the observed values of y. 11.The homoskedasticity assumption is required OLS to be unbiased.

Explanation / Answer

(1) True

(2) False

(3) True

(4) True

(5) True

(6) True

(8) False

(10) False

(12) True

(13) True

(14) False

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