Suppose that the true population relationship is given by: y = 0 + 1x1 + 2x2 + e

Further suppose that there is a relationship between x1 and x2, given by: x2 = 0 + 1x1 + where 1 and 2 are non-zero.

(a) Find the expected values of 0 and 1 if the independent variable x2 is omitted from the regression.

(b) Calculate the bias (if any) of 0 and 1 when x2 is omitted.

(c) What values of 1 and 2 would result in 0 and 1 remaining unbiased