Answer- If r xy = 0, then:

If the regression coefficients are both 0 then r is 0. The reasoning for either one of them being 0 holds true mathematically but in the econometrics sense, rxy 0, means that there is no linear relationship between x and y as covariance is 0 so one of the regression coefficient being non-zero would indicate existence of a relationship between the two variables. Hence, option c is the most appropriate one.

Question

If r xy = 0,

then:

A b_yx = 0

B b_xy = 0

C Both (a) and (b)

D Neither (a) or (b)

E b_yx ≠ b_xy

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If r xy = 0,

Solution