Question

In a regression, if an important explanatory variable is

Q: Answer-In a regression, if an important explanatory variable is omitted, it can lead to:

Omitted variable bias occurs when a variable that is correlated with both the included regressors and the dependent variable is left out of the model. This causes the error term to be correlated with the regressor, biasing the OLS estimates.

omitted, it can lead to:

A Heteroscedasticity.

B Autocorrelation.

C Omitted variable bias (a violation of the zero conditional mean assumption).

D Perfect multicollinearity.

E None of these

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In a regression, if an important explanatory variable is

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