Which of the Following Is a Reason for Using the Correlated

question 18

Multiple Choice

Which of the following is a reason for using the correlated random effects approach?

• A)It provides unbiased and consistent estimators when the idiosyncratic errors are serially correlated.
• B)It provides unbiased and consistent estimators when the idiosyncratic errors are heteroskedastic.
• C)It provides a more efficient estimate than the fixed effects approach.
• D)It provides a way to include time-constant explanatory variables in a fixed effects analysis.

---

Definitions:

Anticipates Consequences

The act of foreseeing or predicting the outcomes or results of a particular action or decision.

Manager

An individual responsible for controlling or administering an organization or group of staff.

Efficient

The quality of achieving maximum productivity with minimum wasted effort or expense.

Core Critical Thinking Skills

Fundamental abilities in critical thinking, such as analysis, evaluation, inference, explanation, and self-regulation.