Question

# 1) Which of the following does not generally decrease the variance of the OLS estimator of...

1) Which of the following does not generally decrease the variance of the OLS estimator of slope βˆ1?

a) Increasing the variance of the error term, b) Increasing the sample size, c) None of the above, d) Increasing the variance of the independent variable

2) If the independent variable is a binary variable then which of the following is true?

a)β0 is a population mean for the group with a value of 1 for the independent variable,

b) β1 is the difference between two population means

c) β0 is the difference between two population means

d) β1 is a population mean for the group with a value of 0 for the independent variable

3) Which of the following is not a consequence of the 3 least squares assumptions

a) The OLS estimators are consistent.

b) The OLS estimators are unbiased.

c) The OLS estimators are approximately normally distributed in large samples.

d) The OLS estimators are efficient.

Q.1) Option a) is correct.

If increasing the variance of the error term then generally does not decrease the variance of the OLS estimator of slope βˆ1 it will increase.

Q.2) Option c) is correct.

If the independent variable is a binary variable then is the difference between two population mean.

Q.3) Option c) is correct.

The least square estimates are linear, consistent as well as efficient but it is not necessory they are normally distribted in large samples .

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