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Suppose After Running the Regression Y = β0 + β1X1

Question 57

Multiple Choice

Suppose after running the regression Y = β0 + β1X1 + β2X2 + β3X3 + β4X4 and examining a plot of the residuals,you have reason to suspect that there is heteroscedasticity in your model.Assume that the heteroscedasticity is directly proportional to the square of the expected value of the dependent variable.How might you transform your dependent variable to correct for this heteroscedasticity?


A) Yi / Suppose after running the regression Y = β<sub>0</sub> + β<sub>1</sub>X<sub>1</sub> + β<sub>2</sub>X<sub>2</sub> + β<sub>3</sub>X<sub>3</sub> + β<sub>4</sub>X<sub>4</sub> and examining a plot of the residuals,you have reason to suspect that there is heteroscedasticity in your model.Assume that the heteroscedasticity is directly proportional to the square of the expected value of the dependent variable.How might you transform your dependent variable to correct for this heteroscedasticity? A) Y<sub>i</sub> / <sub>i</sub> B) Y<sub>i</sub> - Y<sub>i</sub><sub>-1</sub> C) Y<sub>i</sub> - ρY<sub>i</sub><sub>-1</sub> D) (Y<sub>i</sub> - ρY<sub>i</sub><sub>-1</sub>) / <sub>i</sub>
i
B) Yi - Yi-1
C) Yi - ρYi-1
D) (Yi - ρYi-1) / Suppose after running the regression Y = β<sub>0</sub> + β<sub>1</sub>X<sub>1</sub> + β<sub>2</sub>X<sub>2</sub> + β<sub>3</sub>X<sub>3</sub> + β<sub>4</sub>X<sub>4</sub> and examining a plot of the residuals,you have reason to suspect that there is heteroscedasticity in your model.Assume that the heteroscedasticity is directly proportional to the square of the expected value of the dependent variable.How might you transform your dependent variable to correct for this heteroscedasticity? A) Y<sub>i</sub> / <sub>i</sub> B) Y<sub>i</sub> - Y<sub>i</sub><sub>-1</sub> C) Y<sub>i</sub> - ρY<sub>i</sub><sub>-1</sub> D) (Y<sub>i</sub> - ρY<sub>i</sub><sub>-1</sub>) / <sub>i</sub>
i

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