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3. I have mentioned in class in the linear model, no causality is implied from the right hand side to the left hand side. This problem explores that idea. For each i, suppose first yi is generated form a normal distribution with mean 1 and variance 4 (assume yis are independent). Next, r is generated from independent normal distributions with mean yi and variance 9. (a) Is (u,) jointly normal? (c) If I regress y on r and a constant, what will be the expected values of the intercept and slope coefficients?
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E(XY) E(x)E(Y) 7 Now 13 30 0 x 13V3

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