The normality assumption implies that:
A) the population error u is dependent on the explanatory variables and is normally distributed with mean equal to one and variance 2.
B) the population error u is independent of the explanatory variables and is normally distributed with mean equal to one and variance .
C) the population error u is dependent on the explanatory variables and is normally distributed with mean zero and variance .
D) the population error u is independent of the explanatory variables and is normally distributed with mean zero and variance 2.
Correct Answer:
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