In a Multiple Regression Model, the Error Term $\varepsilon$ Is Assumed to Be a Random Variable with a Mean

question 67

Multiple Choice

In a multiple regression model, the error term $\varepsilon$ is assumed to be a random variable with a mean of

• A)zero
• B)-1
• C)1
• D)any value

---

Definitions:

Circular Flow

A model that depicts the continuous movement of money, goods and services, and factors of production between producers and consumers, within an economy.

Local Incomes

The amounts of money earned by individuals or households in a specific local area, which can reflect the economic conditions of that region.

Scarcity

The limited availability of resources to meet unlimited wants and needs.

Economic Principle

A widely accepted generalization that guides the analysis of economics, helping to predict how economic agents will behave under certain conditions.