In order to formulate whether or not the alternative hypothesis ...

[leo leo]

In order to formulate whether or not the alternative hypothesis is one-sided or two-sided, you need some guidance from economic theory.
 
  Choose at least three examples from economics or other fields where you have a clear idea what the null hypothesis and the alternative hypothesis for the slope coefficient should be. Write a brief justification for your answer.
  What will be an ideal response?

Question 2

The sample average of the OLS residuals is
 
  A) some positive number since OLS uses squares.
  B) zero.
  C) unobservable since the population regression function is unknown.
  D) dependent on whether the explanatory variable is mostly positive or negative.

[rachel]

Answer to Question 1

Answer: Answers will vary by student. The problem is to find examples where there is only a single explanatory variable. A student may argue that the price coefficient in a demand function is downward sloping, but unless you control for other variables, this may not be so. The demand for L.A. Laker tickets and their price comes to mind. CAPM is a nice example. Perhaps the marginal propensity to consume in a consumption function is another. Testing for speculative efficiency in exchange rate markets may also work.

Answer to Question 2

Answer: B