The Gauss-Markov Theorem for Multiple Regression Proves That
A)M_X Is $\sigma _ { u } ^ { 2 }$

question 41

Multiple Choice

The Gauss-Markov theorem for multiple regression proves that

• A)M_X is an idempotent matrix.
• B)the OLS estimator is BLUE.
• C)the OLS residuals and predicted values are orthogonal.
• D)the variance-covariance matrix of the OLS estimator is \(\sigma _ { u } ^ { 2 }\) ( \(X ^ { \prime }\) X)^-1.

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Definitions:

Nominal Wage

The wage earned by a worker expressed in current dollars, without adjustments for inflation.

Price Index

An index number that shows how the weighted-average price of a “market basket” of goods changes over time relative to its price in a specific base year.

Real Wage

The purchasing power of a person's earnings, accounting for inflation, defining what goods and services can actually be bought with wages.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, intended to represent the monthly change in the price level experienced by consumers.