If the errors are heteroskedastic, then
A. OLS is BLUE.
B. WLS is BLUE if the conditional variance of the errors is known up to a constant factor of proportionality.
C. LAD is BLUE if the conditional variance of the errors is known up to a constant factor of proportionality.
D. OLS is efficient.
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Using the textbook example of 420 California school districts and the regression of testscores on the student-teacher ratio, you find that the standard error on the slope coefficient is 0.51 when using the heteroskedasticity robust formula, while it is 0.48 when employing the homoskedasticity only formula. When calculating the t-statistic, the recommended procedure is to
A. use the homoskedasticity only formula because the t-statistic becomes larger
B. first test for homoskedasticity of the errors and then make a decision
C. use the heteroskedasticity robust formula
D. make a decision depending on how much different the estimate of the slope is under the two procedures
A binary variable is often called a
A. dummy variable.
B. dependent variable.
C. residual.
D. power of a test.
Which of the following is true of dummy variables?
A dummy variable always takes a value less than 1.
B. A dummy variable always takes a value higher than 1.
C. A dummy variable takes a value of 0 or 1.
D. A dummy variable takes a value of 1 or 10.
Which of the following is true of dependent variables?
A dependent variable can only have a numerical value.
B. A dependent variable cannot have more than 2 values.
C. A dependent variable can be binary.
D. A dependent variable cannot have a qualitative meaning.
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