Suppose the Variable Has Been Omitted from the Following

question 14

Multiple Choice

Suppose the variable has been omitted from the following regression equation, is the estimator obtained when is omitted from the equation. If is said to _____.

• A)have an upward bias
• B)have a downward bias
• C) be unbiased
• D) be biased toward zero

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Definitions:

Income Summary

An account used in the closing process to collect the balance of all temporary accounts and transfer the result to permanent equity accounts.

Expense Accounts

Ledger accounts that record the costs incurred by a business in its operational activities, excluding the cost of goods sold.

Capital

The financial resources or assets owned by a business used to fund its operations and growth.

Temporary Account

An account used to track transactions for a single accounting period, closed at the end and its balances are transferred to permanent accounts.