The Presence of Correlated Error Terms Creates Problems for Inference

question 42

Multiple Choice

The presence of correlated error terms creates problems for inference based on OLS. These can be overcome by

• A)using HAC standard errors.
• B)using heteroskedasticity-robust standard errors.
• C)reordering the observations until the correlation disappears.
• D)using homoskedasticity-only standard errors.

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