Economics

] Define the following terms for a multiple regression model: population regression function, disturbance, sample regression function, residual.

(b) [12 marks] List the classical linear regression model assumptions and briefly explain each one.

(c) [12 marks] For each of the assumptions listed in (b) above, give an example of a scenario in which the assumption fails to hold.

(d) [8 marks] Describe the consequences for the ordinary least squares estimator of multiple linear regression coefficients if the disturbance term is heteroskedastic. You may abbreviate heteroskedasticity by using the letter 'H0 in your answer.

(e) [8 marks] What is meant by a regressor being endogenous? Describe the consequences of endogeneity for the ordinary least squares estimator of multiple linear regression coefficients. Name a solution to this problem. (No maths required, verbal explanations will suffice.)