## [answered] 1. Which of the following is n_ot an assumption of the erro

1. Which of the following is n_ot an assumption of the error term in the classical normal regression model? A. zero correlation between the error and the independent variables B. zero correlation between the error and the dependent variable C. error has a mean of zero D. error has a constant variance E. error term follows a normal distribution 2. Suppose the least squares estimated regression model is given by: Demand for Autos = 12.0 - 0.5* Price + l.2*Income Based on this estimated model an increase in Price and Income of 2 units is predicted to lead to: A. a decrease in demand for Autos of 2.4 units B. an increase of demand for Autos of 1.4 units C. no change in the demand for autos D. a decrease in demand for Autos of 1.4 units B. an increase in demand for Autos of 0.4 units 3. Suppose the following regression model is estimated for the change in wages W as a function of the unemployment rate U: w = .007 ? 0.18*U -0.01*U 2 This implies that a decrease in the unemployment rate U is predicted to lead to: A. a decrease in W B. an increase in W C. no change in W D. initially an increase in W then a decrease in W E. initially a decrease in W then an increase in W
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