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Consider a simple regression model Z = β

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MCQs on Econometrics, which is the use of statistical methods to develop theories or test existing hypotheses in economics or finance. 
 


Consider a simple regression model Z = β<sub1</sub> + β<sub2</sub>X + v in which the true dependent variable(Z) is subject to measurement error(w) and is measured by Y = Z + w. Which of the following is a possible consequence of such a model?<br/>I. The standard errors, t-tests, and F-tests are invalid.<br/>II. The standard errors, t-tests, and F-tests are valid.<br/>III. The standard errors will tend to be larger than they would have been if there had been no measurement error, reflecting the fact that the variances of the coefficients are larger.





 
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