The final step in the Breusch-Pagan test is to perform A)an F-test of the overall significance of the squared residuals regression. B)an F-test of the overall significance of the original OLS regression. C)a t-test of the overall significance of the squared residuals regression. D)an F-test of the individual significance of the suspect independent variable in the squared residuals regression.

Question

Quizplus · Accepted Answer

The final step in the Breusch-Pagan test is to perform an F-test of the overall significance of the squared residuals regression. This tests the null hypothesis that the variance of the errors in the model is constant, and if the p-value of the F-test is less than the significant level, then we reject the null hypothesis and conclude that there is heteroscedasticity present in the model. Therefore, option A is the best choice.

The Final Step in the Breusch-Pagan Test Is to Perform