Session 5

Question 1

homoskedasticity

Answer 1

var(u|X = x) = constant

Question 2

heteroskedasticity

Answer 2

var(u|X = x) = function(x)

Question 3

Linear vs. non-linear regression

Linear regression means that the ____ variable can/cannot be expressed as a linear combination of the regression coefficients and independent variables

Non-linear regression means that the ______ variable can/cannot be expressed as a linear combination of the regression coefficients and independent variables

Answer 3

Linear regression means that the dependent variable can be expressed as a linear combination of the regression coefficients and independent variables

Non-linear regression means that the dependent variable can not be expressed as a linear combination of the regression coefficients and independent variables

Question 4

interaction vs. non-linear relationship

Interaction: Predicted change in Y associated with a change in ____ depends on the value of ___

Non-linear relationship:Predicted change in Y associated with a change in __ depends on the value of ____

Answer 4

Interaction: Predicted change in Y associated with a change in X1 depends on the value of a different input variable, X2

Non-linear relationship:Predicted change in Y associated with a change in X1 depends on the value of X1