Question

True or false

1. We should not include the irrelevant independent variable, which has no effects on the dependent variable, into the regression model.                  (      )

2. If the null hypothesis is not rejected, then it means that the null hypothesis is accepted.                                                   (      )

3. A variable that is a proportion or a percent can appear in either original or logarithmic form.                                            (      )

4. The variables correlated with the independent variable of interest must be included as control variables due to the omitted variable bias problem. (      )

5. We can include the interactions for dummy variables with explanatory variables that are not dummy variables to allow for difference in slopes.         (      )

6. When the variance of the unobserved error, u, conditional on the explanatory variables, is not constant, the weighted least squares estimation is more efficient than the OLS estimation with heteroskedasticity-robust standard errors. (     )

7. If the proxy variable is correlated with the regressors of our interest, it will be better to omit the endogenous independent variable rather than using this imperfect proxy variable.                                      (      )

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Answer 1