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 of β0 will be biased.
C) Your estimate for β0 and β1 will be biased.
D) None of the above answers is correct
Correct Answer:
Verified
Correct Answer:
Verified
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