Question 4 (a) What are the FIVE (5) possible sources of heteroscedasticity? marks) (5 (b) Consider the following regression output. Consumption = 0.04 +0.22 Wealth +0.5 Income +0.06 Family se = (0.03) (0.2) (0.42) (0.5) n=40, R = 0.999 Where; Consumption = Weekly consumption Wealth = Family wealth, in $100,000 Income = Monthly salary, in $1,000 Family = Number of family members + (1) Can you detect any abnormality with the results? What is it? How do you know that? (8 marks) (c) Consider following regression. In.M = -5.01 1.04 In. GDP Equation 1 t= (-8.2) (8.03) n= 75, = 0.87, DW = 1.25 (1) Is it a spurious regression? Why? marks) (ii) If we now estimate equation using log form, we obtain: Aln.M=-25 +0.5 Aln.GDP Equation 2 (10.2) n= 75, = 0.52, DW = 1.8 (8 Compare the equation (2) with equation (1). Which equation do you prefer? Why? (4 marks) [Total : 25 Marks]