Multiple Choice
Suppose you are estimating the following model: Yi = β0 + β1Xi + Ui. You believe the variance of the unobserved factors (U) varies with X. If this is true, what is the consequence?
A) Your estimate for β1 will be biased.
B) Your estimate for β0 will be biased.
C) Your estimate for β1 and β0 will be biased.
D) None of the answers is correct.
Correct Answer:
Verified
Correct Answer:
Verified
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