Section 1: Short Answer

1. Answer the following short answer questions:
   1. Describe the possible sources for the stochastic error term.
   2. Discuss all classical assumptions. Make sure to discuss how big of an issue if each were violated. Finally, make sure to discuss why it is important for these assumptions to hold.
   3. Discuss the issue with simply relying on RSquared and Adjusted-RSquared in model selection.
   4. Discuss the problem of not including important variables in your model.