D | Question 8 4.6 pts Suppose you are interested in studying the relationship b

Question

D | Question 8 4.6 pts Suppose you are interested in studying the relationship between education and wage and believes that it could be captured by the following linear relationship : wage Bo+ Bieducation + u Suppose that you estimate the unknown intercept and slope for this linear model. What is the difference between bi and Bi? Suppose further that the only unobservable that can possible affect wage and education is intelligence, which of the following provide evidence Against of OLS Assumption #1? D E(Intelligence/Education) is independent on the education level Corr(Education, Intelligence)#0 Cov(wage, intelligencel0 Corr(Education, Intelligence)-0

Explanation / Answer

Beta_1 is the true parameter of the regression model..

b1 is least square estimate of Beta_1.

more over E(b1)=Beta_1.

correlation (education, intelligence)=0 implies there is no linear relationship between them which is against the assumption

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