heteroskadasicty

Question 1

Multicollinearity occurs when:
a. An independent variable in a multiple regression model can be linearly
predicted by the dependent variable.
b. An independent variable in a multiple regression model can be linearly
predicted by another independent variable.
c. An independent variable in a multiple regression cannot be linearly predicted
by another dependent variable.
d. An independent variable in a multiple regression model cannot be linearly
predicted by another independent variable.

Answer 1

b

Question 2

For data with a heteroskedasticity problem, the estimated parameter coefficients
will be wrong if we do not correct for the heteroskedasticity.
a. True
b. Fals3

Answer 2

b

Question 3

Which of the following occurs when introducing heteroskedasticity?
A. The standard errors expand making the t-statistic increase.
B. The variance increases, making the standard errors decrease.
C. The t-statistics decreases, decreasing the p-value.
D. The standard errors expand making the t-statistic decrease.

Answer 3

d

Question 4

Heteroskedasticity is when your X variable is correlated with your Y variable.
a. TRUE
b. FALSE

Answer 4

b

Question 5

Suppose we found out that there is a heteroskedasticity problem that was not
corrected. Are we able to tell whether the coefficient for luxury is statistically
significant without correcting the standard errors?
a. Yes, the p-value is zero before correcting the standard errors, so it should be
even lower after correcting the standard errors.
b. Yes, the p-value will increase, but not enough to make the coefficient
insignificant.
c. No, we cannot know how much the p-value will change without running the
corrected regression.
d. No, the coefficient will now be insignificant after correcting the standard error

Answer 5

c

Question 6

Heteroskedasticity causes the coefficient estimates to
A. Increase
B. Decrease
C. Remain Unchanged
D. Become zero

Answer 6

c

Question 7

Heteroskedasticity causes the standard errors to
A. Increase
B. Decrease
C. Remain Unchanged
D. Become zero

Answer 7

a

Question 8

Accounting for heteroskedasticity causes the t-statistic to
A. Increase
B. Decrease
C. Remain Unchanged
D. Become zero

Answer 8

b