₉ Suppose That X₁ Is Measured with Error $\beta$ ₀

question 12

Multiple Choice

_9. Suppose that X₁ is measured with error.
Y_i = $\beta$ ₀ + $\beta$ ₁X_1i + $\varepsilon$ _i
X_i = X*_1i + $\nu$ _i
In which of the following cases will the bias be most severe?

• A) The variance of the independent variable (\(\sigma\)_x*) is much smaller than the variance of the error measurement error (\(\sigma\)_\(\nu\)).
• B) The variance of the independent variable (\(\sigma\)_x*) is much larger than the variance of the error measurement error ((\(\sigma\)_\(\nu\)).
• C) The variance of the error measurement error ((\(\sigma\)_\(\nu\)) is zero.
• D) There will be no bias.

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Definitions:

Demand for Labour

The total amount of workers that employers want to hire at a given wage rate and period.

Historical Relationship

The examination and understanding of how past interactions, patterns, or events influence current states or future developments.

Ratio Analysis

A quantitative method of projecting HR demand by analyzing the historical relationship between an operational index and the number of employees required.

Operational Index

A quantifiable measure used to assess, compare, and track the efficiency or performance of a business's operations over time.