Consider the regressions , and , where and ; are constants. Is it true that
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Consider the regressions , and , where and ; are constants. Is it true that
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Consider the regressions Yᵢ*=β̂₁*+β̂₂*Xᵢ*+ûᵢ*, and Yᵢ=β̂₁+β̂₂Xᵢ+ûᵢ, where Yᵢ*=w₁Yᵢ and Xᵢ*=w₂Xᵢ; w₁,w₂ are constants. Is it true that (A) β̂₁*=w₂β̂₁ (B) β̂₂*=w₂/w₁β̂₂ (C) Var(β̂₂*)=(w₁/w₂)²Var(β̂₂) (D) r_(xy)²≠ r_(x*y*)², where r denotes correlation coefficient
Also written as: Consider the regressions Y_i*=beta_hat_1*+beta_hat_2*X_i*+u_hat_i*, and Y_i=beta_hat_1+beta_hat_2X_i+u_hat_i, where Y_i*=w_1Y_i and X_i*=w_2X_i; w_1,w_2 are constants. Is it true that
Linear regression and OLS has come up 74 times in 7 exams since 2008.
This question is on Interpreting slopes, intercepts and rescaling, part of Linear regression and OLS in Econometrics.
Reading a fitted coefficient, and what changes when variables are rescaled.
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Question from the DSE 2012 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.