When You Have an Omitted Variable Problem,the Assumption That E(ui

question 38

Multiple Choice

When you have an omitted variable problem,the assumption that E(ui Xi) = 0 is violated.This implies that

• A)the sum of the residuals is no longer zero.
• B)there is another estimator called weighted least squares,which is BLUE.
• C)the sum of the residuals times any of the explanatory variables is no longer zero.
• D)the OLS estimator is no longer consistent.

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