5. [10 points] The true regression is given by the following equation: Y = Bo + BIX1+ B2X2+ B3X3 + 1 However, you omit both X2 and X3, and estimate the following regression instead: Y = Bo + Bixit" The relationship between the omitted variables and X1 can be expressed by the following auxilliary regressions: X2 = do + 1X1 + u2 X3 = 70+ 71X1+ u3 a) (6 points) Express the values of Bo and B, in terms of the true B's. What is the omitted variable bias term for Bo ? What is the omitted variable bias term for B,"? b) (4 points) Suppose that X2 has a negative effect on Y (B2 = -140) but is positively related with the X1 (81 = 0.2). Also suppose that X3 has a positive effect on Y (B3 = 7) and is positively related to X1 (y1 = 4). Compute the amount of bias in the estimate B, due to the omitted variables. Carefully explain why you got this level of bias when omitting X2 and X3