Suppose After Running the Regression Y = β₀ + β₁X₁

question 57

Multiple Choice

Suppose after running the regression Y = β₀ + β₁X₁ + β₂X₂ + β₃X₃ + β₄X₄ and examining a plot of the residuals,you have reason to suspect that there is heteroscedasticity in your model.Assume that the heteroscedasticity is directly proportional to the square of the expected value of the dependent variable.How might you transform your dependent variable to correct for this heteroscedasticity?

• A)Y_i / _i
• B)Y_i - Y_i-1
• C)Y_i - ρY_i-1
• D)(Y_i - ρY_i-1)/ _i

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