The Least Squares Assumptions , where 1. The error term has conditional mean zero given : ; 2. , are independent and identically distributed (i.i.d.) draws from their joint distribution; and 3. Large outliers are unlikely: and have nonzero finite fourth moments. Suppose the first assumption is replaced with . What happens to ? A. The slope changes to . B. The intercept changes to . C. Nothing changes. D. Both the intercept and the slope change to and respectively. Are the rest of the OLS assumptions satisfied? A. OLS assumption (3) is satisfied but not (2). B. Both OLS assumptions (2) and (3) are satisfied. C. OLS assumption (2) is satisfied but not (3). D. Neither OLS assumption (2) nor (3) is satisfied.

Question

08-04-2021
Mathematics

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The Least Squares Assumptions , where 1. The error term has conditional mean zero given : ; 2. , are independent and identically distributed (i.i.d.) draws from their joint distribution; and 3. Large outliers are unlikely: and have nonzero finite fourth moments. Suppose the first assumption is replaced with . What happens to ? A. The slope changes to . B. The intercept changes to . C. Nothing changes. D. Both the intercept and the slope change to and respectively. Are the rest of the OLS assumptions satisfied? A. OLS assumption (3) is satisfied but not (2). B. Both OLS assumptions (2) and (3) are satisfied. C. OLS assumption (2) is satisfied but not (3). D. Neither OLS assumption (2) nor (3) is satisfied.

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