Omitted Variable Bias A $R ^ { 2 } < 1$

question 15

Short Answer

Omitted variable bias a. will always be present as long as the regression $R ^ { 2 } < 1$
b. is always there but is negligible in almost all economic examples
c. exists if the omitted variable is correlated with the included regressor but is not a determinant of the dependent variable
d. exists if the omitted variable is correlated with the included regressor and is a determinant of the dependent variable

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Definitions:

Emotional Event

An occurrence that triggers a strong emotional response, which can significantly affect an individual's memory and behavior.

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Underlying principles or beliefs that form the basis of a theory, often taken as truth without direct evidence within the context of the theoretical framework.

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