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1. (18 points overall) Answer yes or no to each of the items (a)-c). If yes, briefly justify the statement, if no, provide a

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Answer: 1.a. This statement is False, suppose Xi and Yi are the heights and weights of a certain population. So there may be some dependency between the Xi and Yi. In a nut shell, it can be said that, (Xi,Yi) is independent to (Xj,Yj) given that i \neq j but Xi can be dependent on Yi

b. This statement is True. In mutivariate OLS, we have here 3 regressors, X1, X2 and X3. The OLS assumption of multicollinearity states that there should not be no linear relationship between the independent variables. So if (X1,X2) , (X2,X3) and (X3,X1) are not perfectly correlated, then we do not have the perfect multicollinearity.

c. As the assumption 1 is not stated here it is difficult to answer the question. T test is used for conducting hypothesis test on regression coefficients. Violations of normality in OLS can be mitigated by t test though.

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