- True or False. Explain your answer in detail.
- In a population regression model,
*Y*=*β*_{0}+*β*_{1}*X*+*u*,*β*_{0 }and*β*_{1 }are unknown. Because of this uncertainty,*Var*(*β*_{0}) and*Var*(*β*_{1}) are not equal to zero.*R*^{2 }measures the ratio of variation that can be explained by the regression model to variation that can’t be explained by the regression model.

*E*(*u*|*X*) = 0 only implies*E*(*u*) = 0. It doesn’t say anything about the relationship between*u*and*X*.

- In order for our regression estimators to be unbiased, we need the variance of
*X*to be as small as possible. In the best scenario, we want the variance of*X*to be 0.

- The homoskedasticity assumption states that variances of error terms given different value of X are the same.

- In a population regression model,