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308BDC75d01 - Chapter 4 Linear Regression with One...

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1 Chapter 4 Linear Regression with One Regressor Multiple Choice 1) When the estimated slope coefficient in the simple regression model, 1 ˆ β , is zero, then a. R 2 = Y . b. 0 < R 2 < 1. c. R 2 = 0. d. R 2 > ( SSR / TSS ). Answer : c 2) Heteroskedasticity means that Answer : b 3) With heteroskedastic errors, the weighted least squares estimator is BLUE. You should use OLS with heteroskedasticity-robust standard errors because Answer : b 4) (Requires Appendix Material) Which of the following statements is correct? Answer : a
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2 5) Binary variables a. are generally used to control for outliers in your sample. b. can take on more than two values. c. exclude certain individuals from your sample. d. can take on only two values. Answer : d 6) When estimating a demand function for a good where quantity demanded is a linear function of the price, you should Answer : b 7) The reason why estimators have a sampling distribution is that Answer : d 8) In the simple linear regression model, the regression slope Answer : c
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3 9) The OLS estimator is derived by a. connecting the Y i corresponding to the lowest X i observation with the Y i corresponding to the highest X i observation. b. making sure that the standard error of the regression equals the standard error of the slope estimator. c. minimizing the sum of absolute residuals. d. minimizing the sum of squared residuals. Answer : d
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