Which of the Following Problems Can Arise in Policy Analysis

question 7

Multiple Choice

Which of the following problems can arise in policy analysis and program evaluation using a multiple linear regression model?

• A)There exists homoskedasticity in the model.
• B)The model can produce predicted probabilities that are less than zero and greater than one.
• C)The model leads to the omitted variable bias as only two independent factors can be included in the model.
• D)The model leads to an overestimation of the effect of independent variables on the dependent variable.

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Definitions:

Modigliani

Refers to Franco Modigliani, an Italian-American economist known for his work on corporate finance, the Modigliani-Miller theorem, and the life-cycle hypothesis of saving.

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The process of assessing the performance, management, and investment strategies of mutual funds to determine their suitability for an investor.

Rank Portfolios

The process of arranging portfolios in order according to a certain criterion, such as return or risk.