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Intro to Econometrics help needed

Multiple Choice help need with the following 2 questions.

1. The result that E(a(hat)1) = a1 is important because:

a) Since a(hat)1) is a constant it will always equal a1.

b) a(hat)1) is a random variable, so it has to equal a1.

c) a(hat)1) is a random variable, it can take on many different values and so if it is centered around the true a1 , we can have confidence that doing hypothesis testing regarding a1 is valid.

d) We believe that a(hat)1) is true.

2. Choosing a(hat)0) and a(hat)1) to minimize the sum of squared residuals implies that:

a) We are maximizing the explanatory part of the regression model.

b) Minimizing the standard error estimates for a(hat)0) and a(hat)1) .

c) Increase the size of the confidence region when doing hypothesis testing.

d) Increasing the likelihood of finding that the estimated coefficients are statistically different from zero.

Solution Preview

1. When the expectation of an estimate is the true value of the parameter, we say that this estimator is unbiased. a(hat)1 is unbiased, because E(a(hat)1) = a1. First, please remember ...

Solution Summary

Intro to Econometrics help needed