In the context of a controlled experiment, consider the simple linear regression formulation = 0 + 1 + . Let the be the outcome, the treatment level, and contain all the additional determinants of the outcome. Then:
A) the OLS estimator of the slope will be inconsistent in the case of a randomly assigned Xi since there are omitted variables present.
B) Xi and ui will be independently distributed if the Xi be are randomly assigned.
C) β0 represents the causal effect of X on Y when X is zero.
D) E(Y X = 0) is the expected value for the treatment group.
Ans: B) Xi and ui will be independently distributed if the Xi be are randomly assigned.
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