QUESTION 9 Consider the simple linear regression model, y = ßo + B₁x + u. Which of the following statements is correct? The zero conditional mean assumption, E(ulx) = 0, includes the assumption that the average value of u in the population is zero: E(u) O a. = 0. The zero conditional mean assumption, E(ulx) = 0, includes the assumption that the average value of u does not depend on the value O b. of x: E(ulx) = E(u). The zero conditional mean assumption implies that population regression function (PRF) is a linear function of x: E(ylx) = ßo + B₁x, OC. indicating that a one-unit increase in x changes the expected value of y by the amount ³₁. O d. Options (a), (b) and (c) are correct O e. Options (a) and (c) are correct

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QUESTION 9
Consider the simple linear regression model, y = Bo + B₁x + u. Which of the following statements is correct?
The zero conditional mean assumption, E(u|x) = 0, includes the assumption that the average value of u in the population is zero: E(u)
= 0.
a.
The zero conditional mean assumption, E(u|x) = 0, includes the assumption that the average value of u does not depend on the value
of x: E(ulx) = E(u).
C.
The zero conditional mean assumption implies that population regression function (PRF) is a linear function of x: E(ylx) = Bo + B₁x,
indicating that a one-unit increase in x changes the expected value of y by the amount ³₁.
d. Options (a), (b) and (c) are correct
O e. Options (a) and (c) are correct
Transcribed Image Text:QUESTION 9 Consider the simple linear regression model, y = Bo + B₁x + u. Which of the following statements is correct? The zero conditional mean assumption, E(u|x) = 0, includes the assumption that the average value of u in the population is zero: E(u) = 0. a. The zero conditional mean assumption, E(u|x) = 0, includes the assumption that the average value of u does not depend on the value of x: E(ulx) = E(u). C. The zero conditional mean assumption implies that population regression function (PRF) is a linear function of x: E(ylx) = Bo + B₁x, indicating that a one-unit increase in x changes the expected value of y by the amount ³₁. d. Options (a), (b) and (c) are correct O e. Options (a) and (c) are correct
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