Question

# 1. The Central Limit Theorem A. States that the OLS estimator is BLUE B. states that...

1. The Central Limit Theorem

• A. States that the OLS estimator is BLUE
• B. states that the mean of the sampling distribution of the mean is equal to the population mean
• C. none of these
• D. states that the mean of the sampling distribution of the mean is equal to the population standard deviation divided by the square root of the sample size

2. Consider the regression equation Ci= β0+β1 Yi+ ui where C is consumption and Y is disposable income. The slope parameter β1 indicates

• A. Change in Y divided by change in C
• B. C/Y
• C. Y/C
• D. Change in C divided by change in Y

1. Ans: States that the mean of the sampling distribution of the mean is equal to the population mean.

Explanation:

The central limit theorem states that the sampling distribution of the mean approaches a normal distribution. It states if the sample size is large from a population with a finite level of variance, the mean of the sampling distribution of the mean is equal to the population mean.

Thus, option [B] is correct answer.

2. Ans: Change in C divided by change in Y

Explanation:

The slope parameter β1 indicates the Marginal Propensity to Consume (MPC). MPC is defined as Change in C divided by change in Y.

Thus, option [D] is correct answer.

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