Homework Help is Here – Start Your Trial Now!
Math
Statistics
Let edu denote years of education, exper years of experience, wage denote wages measured in dollars per hour, and assume that the following model is correct: wage=B₁ + B₂edu + e where E[eledu, exper] = 0 and the error e is homoskedastic, so that Var(eledu, exper) = ². Consider two regressions: (I) A first regression estimates the given model (denote those estimates by b₁,b₂); (II) A second regression also adds exper as a regressor -- i.e. estimates wage = B₁ + B₂edu + ß3exper + e (denote those estimates by b₁,b₂, 53). Which of the following statements is true? a. The estimator b₂ may be biased (i.e. we may have E[b₂] # B₂). O b. If wage and exper are positively correlated, then E[b3] > 0. O c. Var(b₂) depends on the correlation between exper and edu (Hint: this is not asking the variance of b2.) O d. If Var(b₂) = Var(5₂), then the correlation between exper and edu must be zero. O e. The correlation between wage and exper must be equal to zero.

Let edu denote years of education, exper years of experience, wage denote wages measured in dollars per hour, and assume that the following model is correct: wage=B₁ + B₂edu + e where E[eledu, exper] = 0 and the error e is homoskedastic, so that Var(eledu, exper) = ². Consider two regressions: (I) A first regression estimates the given model (denote those estimates by b₁,b₂); (II) A second regression also adds exper as a regressor -- i.e. estimates wage = B₁ + B₂edu + ß3exper + e (denote those estimates by b₁,b₂, 53). Which of the following statements is true? a. The estimator b₂ may be biased (i.e. we may have E[b₂] # B₂). O b. If wage and exper are positively correlated, then E[b3] > 0. O c. Var(b₂) depends on the correlation between exper and edu (Hint: this is not asking the variance of b2.) O d. If Var(b₂) = Var(5₂), then the correlation between exper and edu must be zero. O e. The correlation between wage and exper must be equal to zero.

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
See similar textbooks
icon
Related questions
Question
Let edu denote years of education, exper years of experience, wage denote wages measured in dollars per hour, and assume that the following model is correct: wage = B1 + B2edu + e where E[eledu, exper] = 0 and the error e is homoskedastic, so that Var(e|edu, exper) = Consider two regressions: (I) A first regression estimates the given model (denote those estimates by b1, b2); (I) A second regression also adds exper as a regressor -- i.e. estimates wage = ß1 + Bzedu + ßzexper + e (denote those estimates by b1, b2, b3). Which of the following statements is true? O a. The estimator b2 may be biased (i.e. we may have E[b2] # B2). O b. If wage and exper are positively correlated, then E[b3] > 0. O c. Var(b2) depends on the correlation between exper and edu (Hint: this is not asking the variance of b2.) O d. If Var(b2) = Var(b2), then the correlation between exper and edu must be zero. Oe. The correlation between wage and exper must be equal to zero. Clear my choice
Transcribed Image Text:Let edu denote years of education, exper years of experience, wage denote wages measured in dollars per hour, and assume that the following model is correct: wage = B1 + B2edu + e where E[eledu, exper] = 0 and the error e is homoskedastic, so that Var(e|edu, exper) = Consider two regressions: (I) A first regression estimates the given model (denote those estimates by b1, b2); (I) A second regression also adds exper as a regressor -- i.e. estimates wage = ß1 + Bzedu + ßzexper + e (denote those estimates by b1, b2, b3). Which of the following statements is true? O a. The estimator b2 may be biased (i.e. we may have E[b2] # B2). O b. If wage and exper are positively correlated, then E[b3] > 0. O c. Var(b2) depends on the correlation between exper and edu (Hint: this is not asking the variance of b2.) O d. If Var(b2) = Var(b2), then the correlation between exper and edu must be zero. Oe. The correlation between wage and exper must be equal to zero. Clear my choice
Expert Solution
steps

Step by step

Solved in 3 steps with 6 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman
SEE MORE TEXTBOOKS