QUESTION 39

Which one of the following is not an assumption of the CLRM:

a. The errors have zero mean

b. The variance of the errors is constant and finite over all values of xt

c. The errors are statistically independent of one another

d. The errors are normally distributed.. d. H is accepted

QUESTION 40

Which of the following is not true of R2:

a. If the model is reparametrized and the dependent variable changes, R2 will change

b.R2 never falls if more regressors are added

C.R2 has no units and therefore offers no intuition

d. R2 can take high values even for nonsense time series regressions