ECONOMETRICS:  Consider the simple linear regression Y = a + b*X + u, What are the consequences of endogeneity?

Explain why in every econometric model there must be an error term, explain its function.

What is event modeling?     Multiple Choice The event model adjusts data for each of the events identified to distort the trend and seasonal patterns of the time series. The event model adds a growth factor to the moving average as a way of adjusting for the event. The event model adds a smoothing constant for the events identified as important in the historical data. The event model initializes events so they can be selected to initialize or warm up the model.

See Figure 2.2 and examine the model.  Unlike other circular flow models, this model is missing another sector/s. what is the missing sector?

Please answer all three sub-sections of this question