A Study Based on OLS Regressions Is Internally Valid If

question 29

Multiple Choice

A study based on OLS regressions is internally valid if

• A)the errors are homoskedastic, and there are no more than two binary variables present among the regressors.
• B)you use a two-sided alternative hypothesis, and standard errors are calculated using the heteroskedasticity-robust formula.
• C)weighted least squares produces similar results, and the t-statistic is normally distributed in large samples.
• D)the OLS estimator is unbiased and consistent, and the standard errors are computed in a way that makes confidence intervals have the desired confidence level.

---

Definitions:

Purchasing-Power Parity

A theory which posits that currencies are in equilibrium in terms of exchange rates when the purchasing power in both countries is identical.

Gold

A yellow precious metal valued for its rarity, durability, and use in jewelry, electronics, and as a form of currency.

Net Exports

The sum total of a country's exports minus its imports, showcasing the balance of trade.

Goods And Services

The output of economic activity; goods are tangible items, while services are intangible acts or efforts.