Why Should Good Non-Sample Information Be Incorporated into an Econometric

question 10

Multiple Choice

Why should good non-sample information be incorporated into an econometric model via restricted least squares?

• A)it reduces the variance of estimated coefficients without introducing bias
• B)it allows more precise hypotheses testing to be done
• C)it reduces the degrees of freedom in the denominator of an F-test
• D)It reduces the probability of rejecting a true null hypothesis

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