Question

Discuss whether each of the following statements is correct or not.

(a) A large t-value implies a low p-value.

(b) The law of iterated expectations implies that if the conditional mean of Y given X is zero, then the mean of Y is zero.

(c) A sample correlation of 0.97 between the regressors causes OLS estimators to be biased.

(d) Measurement error in the independent variable causes OLS estimators to be biased.

Answer 1

Question A)

.The larger P-value implies a low p- value

It is correct. Since p- value is area in the tails beyond the t-value .As t-value is become larger p- value becomes smaller

B)

the law of iterated expectations implies that if the conditional mean y given x is zero then mean of y is zero..

It is a correct statement

Because if y is conditioned on x then expected value of y given x is independent of x it depends on y only.

C)

A sample Correlation of 0.97 between the regressors causes OLS estimator to be biased

It is not correct statement

Because high Correlation implies OLS estimator to be unbiased

D)

Measurement errors in the independent variable causes OLS estimator to be biased

It is not correct statement

Since OLS estimator to be unbiased & consistent