Assignment on Econometrics Concepts

Mira is analyzing the results of her recent survey on student performance. She notices that the variance of the errors in her predictions is not constant. Which assumption of CLRM is being violated in her dataset

• Heteroskedasticity

• Autocorrelation

• Multicollinearity

• The errors have non- zero mean

While conducting a study, what impact does ignoring heteroscedasticity have on the reliability of the OLS estimates in a regression analysis?

• Hypothesis testing will be incorrect

• It will result in larger standard errors

• It will affect the efficiency of the estimates

• All of the above will be true.

Which of the following methods is least effective in addressing issues of multicollinearity?

• Remove highly correlated predictors

• Increase sample size

• Changing the functional form

• Standardize the variables

What impact does multicollinearity have on the variance of the OLS estimator?

• It increases the variance of the estimator

• It decreases the variance of the estimator

• It has no effect on the variance of the estimator

• It makes the estimator biased

A sure way of removing multicollinearity from the model is to

• Work with panel data

• Drop variables that cause multicollinearity in the first place

• Transform the variables by first differencing them

• Obtaining additional sample data

Autocorrelation is generally occurred in

• Cross-section data

• Time series data

• Pooled data

• None of the above

The regression coefficient estimated in the presence of autocorrelation in the sample data are NOT

• Unbiased estimators

• Consistent estimators

• Efficient estimators

• Linear estimators

The violation of the assumption of constant variance of the residual is known as

• Heteroscedasticity

• Multicollinearity

• Homoscedasticity

• Autocorrelation

Which of the following tests is typically affected by multicollinearity?

• f test

• t test

• both a and b

• none of the above

Heteroscedasticity is generally occurred in

• Cross-section data

• Time series data

• Pooled data

• None of the above