Suppose you are estimating the following model: Yi = ?0 + ?1Xi + Ui. You believe the variance of the unobserved factors (U) varies with X. If this is true, what is the consequence?
A. Your estimate of ?0 will be biased.
B. Your estimate for ?0 and ?1 will be biased.
C. Your estimate for ?1 will be biased.
D. None of the above answers is correct
Answer: D
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