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2. (Based on Stock & Watson Introduction to Econometrics 6th ed., Exercise 4.5.) A professor decides to run an experiment to
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Date: ----8/5/2019 Answer. Consider the experiment provided in the exercise; to measure the effect of time pressure on exam s

The term u, represents other factors that have an effect on an individual students exam score. For, example, studying time v

b. Due to random assignment of X,, u, is independent of X, Since, u, represents deviations from the average value, so E(u,)-0

C. The assumption that (X..Х),i = 1, , n are independent and identically distributed draws from their joint distribution is t

The assumption that, large outliers are unlikely: X,and Yhave non zero finite fourth moments is true because of the restricte

i. The computation of the prediction for the average score of students given 90 minutes to complete the exam is as shown belo

ii. The computation of the estimated gain in score for a student who is given an additional 10 minutes on the exam is calcula

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2. (Based on Stock & Watson "Introduction to Econometrics 6th ed., Exercise 4.5.) A professor decides to run an experiment to measure the effect of time pressure on final exam scores. He...
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