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Econometrics

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Rescaling and readability

EMETRC-GEAGLK

Suppose you estimate the Simple Linear Regression Model via OLS:

$$y_i = \beta_0 + \beta_1 x_i + u_i$$

...obtaining estimates of 1.346 for the constant and 0.00000587 for the slope term, both of which are statistically significant at the one percent significance level.

Moreover, the r-squared value is $0.193$.

Given this, evaluate the following statement: changing the units of the $x_i$ variable could make the estimates easier to read.

A

TRUE

B

FALSE

C

UNCERTAIN