ndicates 'Answer: ___'.

(i)A simple linear regression model will have a variance inflation factor of

(a)0

(b)1

(c)-1

(d)0.5

(e)None of the above.

Answer: ___

(ii)Suppose we conducted the hypothesis test for the true slope of the regression line at the 5% level of significance.Our p value has been determined to be 0.0002 (two - tailed).

(a)We must reject the null hypothesis test at the 5% level of significance.

(b)We must reject the null hypothesis test at the 10% level of significance.

(c)We must reject the null hypothesis at the 1% level of significance.

(d)the conclusion inferred from the test indicates that the relationship between the two random variables appear to be independent.We must remove the independent factor from our model, no matter what our level of significance is set.

(e)Cannot be determined from the information given

Answer: ___

(iii)A model suffering from heteroscedasticity indicates that

(a)The error terms are correlated and our data for all of the independent variables and the dependent variable are biased.The results inferred from the hypothesis tests are suspect.

(b)The error terms do not have a constant variance and thus our coefficients are biased.The ordinary least squares estimates are no longer considered the best least unbiased estimates.

(c)The error terms do not have a constant variance but they are considered the best least unbiased estimates.The conclusions from the hypothesis tests are suspect because of a violation of the Gauss Markov theorem.

(d)None of the above.

Answer: ___

(iv)Consider that we have a regression model and we tested the model to see if it does suffer from heteroscedasticity.Below is a sample output. (This problem is not related to section one.)

Breusch - Pagan / Cook - Weisberg test for heteroscedasticity

H₀:Constant Variance

Variable : Fitted value of Y

chi2(i)=0.60

Prob>chi2=0.4374

At the 5% level of significance, what can we conclude?

(a)The model does not suffer from heteroscedasticity.

(b)The model does suffer from heteroscedasticity.

(c)Cannot draw a conclusion from this test.

(d)None of the above.

Answer: ___