- True or False. Explain your answer in detail.
- In a population regression model, Y = β0+β1X+u, β0 and β1 are unknown. Because of this uncertainty, Var(β0) and Var(β1) are not equal to zero.
- R2 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, Y = β0+β1X+u, β0 and β1 are unknown. Because of this uncertainty, Var(β0) and Var(β1) are not equal to zero.