When You Have an Omitted Variable Problem, the Assumption That

question 17

Multiple Choice

When you have an omitted variable problem, the assumption that E(u_i X_i) = 0 is violated. This implies that

• A)the sum of the residuals is no longer zero.
• B)there is another estimator called weighted least squares, which is BLUE.
• C)the sum of the residuals times any of the explanatory variables is no longer zero.
• D)the OLS estimator is no longer consistent.

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Definitions:

Other-race Effect

The tendency to more easily recognize faces of the race that one is most familiar with, which can lead to difficulties in cross-racial identification.

Gender Preference

An individual's inclination or favoritism towards a specific gender, which can influence interpersonal attraction, friendships, and other social dynamics.

Criminal

An individual who has committed a crime or unlawful act as defined by the legal system.

Police Officers

Individuals authorized to maintain public order, enforce laws, and prevent, detect, and investigate crimes.