2. Consider the following linear regression model:

Yr =.60 +161in +162Xi2 +5: a. Explain how the ordinary least squares estiJnators for , and

[30 ,3;

are determined. [32 b. Explain how a condence interval for can be constructed. 1% 0. Explain how one can test the hypothesis that =1 (as in, write 131 down the null and alternative hypothesis, the t-statistic, how would

you nd the critical value, and how you would rejectlfail to reject

the null hypothesis). (1. Explain how one can test the hypothesis that = =0. [31132 e. Suppose that . What will happen if you try to estimate

X1 = 2 *X,.2 +3 the above model?