Q1. If our regression equation is y = X + u, where we have T observations and K regressors, what will be the dimension of using the standard matrix notation.

(a). T x K

(b). T x 1

(c). K x 1

(d). K x K

Q2. Suppose that the value of R² for an estimated regression model is exactly one. Which of the following are true?

i. All of the data points must lie exactly on the line

ii. All of the residuals must be zero

iii. All of the variability of y around its mean has been explained by the model

iv. The fitted line will be horizontal with respect to all of the explanatory variables.

(a). (ii) and (iv) only

(b). (i) and (iii) only

(c). (i), (ii), and (iii) only

(d). (i), (ii), (iii), and (iv)