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 σ². B)the population error u is independent of the explanatory variables and is normally distributed with mean equal to one and variance σ. C)the population error u is dependent on the explanatory variables and is normally distributed with mean zero and variance σ. D)the population error u is independent of the explanatory variables and is normally distributed with mean zero and variance σ².

Question

Quizplus · Accepted Answer

The normality assumption in regression analysis states that the population error term is normally distributed with a mean of zero and a constant variance, σ², and is independent of the explanatory variables.

The Normality Assumption Implies That