πŸ“’ Too many exams? Don’t know which one suits you best? Book Your Free Expert πŸ‘‰ call Now!

    Question

    In the classical linear regression model (CLRM), one of

    the key assumptions is that the error term has:
    A Zero mean Correct Answer Incorrect Answer
    B Constant variance Correct Answer Incorrect Answer
    C No autocorrelation Correct Answer Incorrect Answer
    D All of the above Correct Answer Incorrect Answer

    Solution

    Solution: The CLRM assumptions are essential for the OLS estimators to be BLUE (Best Linear Unbiased Estimator). Key assumptions about the error term ui include: 1. E(ui)=0 (zero mean) 2. Var(ui)=Οƒ2 (homoscedasticity, constant variance) 3. Cov(ui,uj)=0 (no autocorrelation) All these together ensure unbiasedness, efficiency, and consistency of the OLS estimators.

    Practice Next
    More Research Questions
    ask-question
    9