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The document introduces the concepts of stochastic and non-stochastic relationships between economic variables. It then discusses the simple linear regression model, which represents the relationship between a dependent variable (Y) and independent variable (X) as linear, with some random error (u). Key assumptions of the classical linear regression model are that u has a mean of 0, constant variance, normal distribution, and is independent of X. The model seeks to split the relationship between Y and X int

Author

Ermias Guragaw

Language

EN