Consider the following regression model, Y;=B1+B2X12+ +BxXiK+ ej where E[ e;|x;]=0 and Varle,|x) depends on the value of X, i.e., Var(e;|x;)# o². ... Choose the correct statement. O a. To get around the problem, we often assume that e, is normally distributed. O D. To fix the problem, we need to have an instrumental variable. O C. This problem implies that errors are correlated with one of (x2. O d. If we assume Varle.lx.) = o², the confidence interval is not valid. O e. None of the above is correct.
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
![QUESTION 1
Consider the following regression model,
Y;=B1+B2X12+ + BxXik+ ej
where E[e;|x;]=0 and Var(e,x,) depends on the value of
Xj
i.e., Var(e,|x) = o².
Choose the correct statement.
d. To get around the problem, we often assume that
ej
is normally distributed.
O D. To fix the problem, we need to have an instrumental variable.
(X12°
O C. This problem implies that errors are correlated with one of
Od.
If we assume Var(e,lx) = o2, the confidence interval is not valid.
е.
None of the above is correct.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7aea5f17-4d8f-475f-a835-e28ffd3d801f%2Fcf86d7bc-cfcb-4b06-89b9-a24dcc934655%2Fz0xumwk_processed.png&w=3840&q=75)
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