QUESTION 1 Consider the following regression model, Yi=B1+B2X12++ BxXik+ ej E[e,x,]=0 and Varle,x) depends on the value of Xp i.e., Var(e,x) = o2. where Choose the correct statement. 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 O d. If we assume Varlelx)= o?, the confidence interval is not valid. e. None of the above is correct.

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