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Suppose you are interested in studying the relationship between education and wage, More specifically, suppose that you believe the relationship to be captured by the

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Suppose you are interested in studying the relationship between education and wage, More specifically, suppose that you believe the relationship to be captured by the following linear regression model, Wage = Do + 8, Education + u Suppose further that the only unobservable that can possibly affect both wage and education is intelligence of the individual. OLS assumption (1): The conditional distribution of u, given X, has a mean of zero. Mathematically. E (u,[X,) =0.Which of the following provides evidence in favor of OLS assumption #1? (Check all that apply) A. E(Intelligence\\ Education = x) = E(Intelligence\\ Education = y) for all x # y. B. corr( Intelligence, Education) # 0. C. covariance(Intelligence, Education) #0. D. corr( Intelligence, Education) = 0.Which of the following provides evidence against of OLS assumption #1? (Check all that apply) A. covariance(Intelligence, Education) # 0. B. com(Intelligence, Education) = 0. C. E(Intelligence\\ Education = x) = E(Intelligence\\ Education = y) for all x # y. D. corr( Intelligence, Education) #0. OLS assumption (2): (X;, Y/) , /=1,..., n are independently and identically distributed.Suppose you would like to draw a sample to study the effect of education on wage, Which of the following provides evidence in favor of OLS assumption #2? (Check all that apply) A. corr( Intelligence, Education) = 0. B. A random sample is drawn from a population of college graduates. )C. A sample consisting of a group of college students is drawn repeatedly each year over the course of their college careers, D. A sample consisting of all honor students is drawn from a population of college graduates.Suppose you would like to draw a sample to study the effect of education on wage, Which of the following provides evidence against OLS assumption #27 (Check all that apply) A. Observations consisting of the same group of college students are drawn repeatedly each year over the course of their college careers B. A random sample is drawn from a population of college graduates. C. corr(Intelligence, Education) =0. D. A sample consisting of all honor students is drawn from a population of college graduates.OLS assumption (3): Large outliers are unlikely. Mathematically, X and Y have nonzero finite fourth moments: 0

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