Skip to content
We use only essential cookies to keep you signed in and remember your preferences. See our Cookie Policy.
TestStop
MocksPracticeResourcesIndiaBlogPricing
Sign in
Questions › DSE › DSE 2011 › Q37
2 marksEconometrics › Classical assumptions and their violations › MulticollinearityHardabout 4 min

DSE 2011 Question 37: Classical assumptions and their violations

Consider the equation estimated using ordinary least squares: Y=a0+a1X1+a2X2+a3(X2−X1)+a4X1X2+uY=a_{0}+a_{1}X_{1}+a_{2}X_{2}+a_{3}(X_{2}-X_{1})+a_{4}X_{1}X_{2}+uY=a0​+a1​X1​+a2​X2​+a3​(X2​−X1​)+a4​X1​X2​+u. Which of the following statements is true?

Tap an option to check your answer.

Answer and worked solution

Checking your account…

Plain-text version

Consider the equation estimated using ordinary least squares: Y=a₀+a₁X₁+a₂X₂+a₃(X₂-X₁)+a₄X₁X₂+u. Which of the following statements is true? (A) The parameters a₀,a₁,a₂,a₄ can be estimated, but not a₃. (B) The parameters a₀ and a₄ can be estimated but not a₁,a₂,a₃. (C) The parameters a₀,a₁,a₂,a₃ can be estimated, but not a₄. (D) All parameters can be estimated.

Also written as: Consider the equation estimated using ordinary least squares: Y=a_0+a_1X_1+a_2X_2+a_3(X_2-X_1)+a_4X_1X_2+u. Which of the following statements is true?

Classical assumptions and their violations has come up 26 times in 7 exams since 2011.

What this question tests

This question is on Multicollinearity, part of Classical assumptions and their violations in Econometrics.

Highly correlated regressors: symptoms, consequences and the perfect case.

TestStop has 8 past-paper questions on this subtopic; the nearest in year are below.

  • GATE 2023 · Q32An analyst regressed Y on X₁ and X₂. If she later noticed that X₁=5X₂, then which of the following…
Practise Classical assumptions and their violationsMore on Multicollinearity

Similar questions from other papers

  • GATE 2026 · Q40Consider a two-variable (x,y) linear regression model given in Equations (1) and (2) below. The error term, uₜ, of Equation (1) is serially correlated as given in…
  • UGC-NET 2026 · Q88Which of the following test is NOT used to detect Heteroscedasticity?
  • IIT JAM 2025 · Q32Which of the following is/are NOT the assumption(s) of Classical Linear Regression Model (CLRM)? (A) Variance of the dependent variable (Yᵢ) is greater than the…
  • UGC-NET 2025 · Q25Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R). Assertion (A): The presence of heteroscedasticity in…
  • CUET-PG 2024 · Q62Which of the following statements are valid assumptions of the Ordinary Least Squares regression model? (A) Expected value of the error term is zero (B)…

Question from the DSE 2011 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.