If the Errors Are Heteroskedastic, Then

question 36

Multiple Choice

If the errors are heteroskedastic, then

• A)OLS is BLUE.
• B)WLS is BLUE if the conditional variance of the errors is known up to a constant factor of proportionality.
• C)LAD is BLUE if the conditional variance of the errors is known up to a constant factor of proportionality.
• D)OLS is efficient.

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Definitions:

Income Change

A variation in the amount of earnings received by a person, household, or economic entity over a period.

Inferior Good

A good for which an increase in income reduces the quantity demanded

Good A

A placeholder term typically used in economic models to represent a generic item or service in the market.

Income Falls

A situation where an individual's or group's earnings decrease over a period of time.