Consider the Multiple Regression Model with Two Regressors X₁ and X₂

question 8

Multiple Choice

Consider the multiple regression model with two regressors X₁ and X₂, where both variables are determinants of the dependent variable. When omitting X₂ from the regression, then there will be omitted variable bias for $\widehat { \beta 1 }$

• A)if X₁ and X₂ are correlated
• B)always
• C)if X₂ is measured in percentages
• D)if X₂ is a dummy variable

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