Quiz 1:

1. _____ has a causal effect on _____. - Income; consumption

2. A cross-sectional data set consists of observations on a variable or several variables
overtime - FALSE
3. A data set that consists of a sample of individuals, households, firms, cities,
states, countries, or a variety of other units, taken at a given point in time, is
called a(n) - cross-sectional data set
4. A data set that consists of observations on a variable or several variables over
time is called … - a time series data set
5. A parameters of an econometric model...... - describe the strength of the relationship
between the variable under study and the factors affecting it
6. A time series data is also called a longitudinal data set. - FALSE
7. An economic model consists of mathematical equations that describe various
relationships between economic variables. - TRUE
8. An empirical analysis relies on _____ to test a theory. - data
9. Data on the birth rate, death rate and population growth rate in
developing countries over a 10-year period. - Pannel data
10. Econometrics is the branch of economics that _____. - develops and uses statistical
methods for estimating economic relationships
11. Experimental data are collected in laboratory environments in the
natural sciences. - TRUE
12. Experimental data are sometimes called retrospective data. - FALSE
13. If the total sum of squares (SST) in a regression equation is 81, and the
residual sum of squares (SSR) is 25, what is the explained sum of
squares (SSE)?
14. In general, the constant that produces the smallest sum of squares
deviations is always the sample average - TRUE
15. In the equation y=β0+β1x+u, what is the estimated value of

β0? -
16. Random sampling complicates the analysis of cross-sectional data. - FALSE
17. The constants of econometric models are referred to as - parameters
18. The notion of ceteris parius means "other factors being unequal" - FALSE
19. The parameters of an econometric model _____. - describe the strength of the
relationship between the variable under study and the factors affecting it
20. The sample covariance between the regressors and the Ordinary Least Square (OLS)
residuals is always positive. - FALSE
21. The term ‘u’ in an econometric model is usually referred to as the - error term
22. What is the estimated value of the slope parameter when the regression equation, y=
α0+ β1x1+u passes through the origin?

23. Which of the following is a difference between panel and pooled cross-sectional
data? -A panel data set consists of data on the same cross-sectional units over a
 given period of time while a pooled data set consists of data on different cross-
sectional units over a given period of time
24. Which of the following is the first step in empirical economic analysis? - Specification
of an econometric model
25. Which of the following is true of experimental data? - Experimental data are collected
in laboratory environments in the natural sciences.
26. Which of the following is true of time series data? - The chronological ordering of
observations in a time series conveys potentially important information.
27. Which of the following terms measures the association between two
variables? - Correlation

Quiz 2
1.What does the equation denote if the regression equation is ?
The sample regression function

2.In the regression of y on x, the error term exhibits heteroskedasticity if _____. - Var(y|x) is
a function of x

3. The explained sum of squares for the regression function, , is defined as

_____.

4. There are n-1 degrees of freedom in Ordinary Least Square residuals. - FALSE

5. If the residual sum of squares (SSR) in a regression analysis is 66 and the total sum of
squares (SST) is equal to 90, what is the value of the coefficient of determination? - 0.27

6. In the equation is the _____.

a. dependent variable
b. independent variable
c. slope parameter
d. intercept parameter

7. If xi and yi are positively correlated in the sample then the estimated slope is _____. -
greater than zero
8. The variance of the slope estimator increases as the error variance decreases. - FALSE
9. A dependent variable is also known as a(n) _____. - response variable
10. What is the estimated value of the slope parameter when the regression equation, y = a0
+ b1x1 + u passes through the origin?
11. The sample correlation between xi and yi is denoted by _____.

12. If a change in variable x causes a change in variable y, variable x is called the _____.
- explanatory variable
13. If the total sum of squares (SST) in a regression equation is 81, and the residual sum of squares
(SSR) is 25, what is the explained sum of squares (SSE)? - 56
14. Which of the following is assumed for establishing the unbiasedness of Ordinary Least Square
(OLS) estimates? - The error term has the same variance given any value of the explanatory variable.
15. A natural measure of the association between two random variables is the correlation coefficient.

- True
.16. The sample covariance between the regressors and the Ordinary Least Square (OLS) residuals is
always positive. - False
17. If the residual sum of squares (SSR) in a regression analysis is 66 and the total sum of squares
(SST) is equal to 90, what is the value of the coefficient of determination? - 0.27
18. Simple regression is an analysis of correlation between two variables. - True

19. R^2 is the ratio of the explained variation compared to the total variation - True
20. In the equation , what is the estimated value of B0?

21. A natural measure of the association between two random variables is the correlation
coefficient.- True

22.

-
- 25
23. In a regression equation, changing the units of measurement of only the independent
variable does not affect the _____. - intercept

24.

- The sample regression function

25. In general, the constant that produces the smallest sum of squared deviations is always the sample
average. - True
26. Which of the following is a nonlinear regression model?

27. In the regression of y on x, the error term exhibits heteroskedasticity if _____. Var(y/x) is a
function of x
28. The variance of the slope estimator increases as the error variance decreases - False

Quiz 3
1. The term _____ refers to the problem of small sample size. - micronumerosity
2. The Gauss-Markov theorem will not hold if _____. - the independent variables have exact
linear relationships among them
3. The value of R^2 is always _____. - lies between 0 and 1

4. ignores the error variance increase because it treats both regressors as

_____. - nonrandom
5. Exclusion of a relevant variable from a multiple linear regression model leads to the problem
of _____. - misspecification of the model
6. High (but not perfect) correlation between two or more independent variables is called _____.
- multicollinearity
7.

8. The coefficient of determination (R2) decreases when an independent variable is added to a

multiple regression model. - False
9. If two regressions use different sets of observations, then we can tell how the R-squareds will
compare, even if one regression uses a subset of regressors. - False
10. Exclusion of a relevant variable from a multiple linear regression model leads to the problem
of _____. - misspecification of the model
11. In econometrics, the general partialling out result is usually called the _____. - Frisch-Waugh
theorem
12. A larger error variance makes it difficult to estimate the partial effect of any of the
independent variables on the dependent variable.- True
13. The coefficient of determination (R^2 ) decreases when an independent variable is added to a
multiple regression model. - False
14. An explanatory variable is said to be exogenous if it is correlated with the error term. - False

15. In the equation , is a(n) - slope parameter

16. The key assumption for the general multiple regression model is that all factors in the
unobserved error term be correlated with the explanatory variables - False
17. If an independent variable in a multiple linear regression model is an exact linear combination
of other independent variables, the model suffers from the problem of _____. - perfect
collinearity
18. If the explained sum of squares is 35 and the total sum of squares is 49, what is the residual
sum of squares? - 14
19.
 20. Which of the following is true of BLUE? - an estimate in linear if and only if it can be
expressed as a linear function of the data on the dependent variable.
21. When one randomly samples from a population, the total sample variation in xj decreases
without bound as the sample size increases - False
22. The term “linear” in a multiple linear regression model means that the equation in linear in
parameters - True

Quiz 4
1. A variable is standardized in the sample:by subtracting off its mean and dividing by its
standard deviation
2. Beta coefficients are always greater than standardized coefficients. - False
3. Changing the unit of measurement of any independent variable, where log of the dependent
variable appears in the regression: - affects only the intercept coefficient.
4. H : â 0, where â is a regression coefficient associated with an explanatory variable, represents
a one-sided alternative hypothesis - False
5. If a new independent variable is added to a regression equation, the adjusted R^2 increases
only if the absolute value of the t statistic of the new variable is greater than one. - True
6. In regression analysis, the standard errors should always be included along with the estimated
coefficients. - True
7. In the following equation, gdp refers to gross domestic product, and FDI refers to foreign
direct investment. log(gdp) = 2.65 + 0.527log(bankcredit) + 0.222FDI (0.13) (0.022) (0.017)
Which of the following statements is then true? - If FDI increases by 1%, gdp increases by
approximately 24.8%, the amount of bank credit remaining constant.
8. One popular measure to describe the relationship between the dependent variable y and each
explanatory variable is the: average partial effect
9. Predictions of a dependent variable are subject to sampling variation - True
10. Standard errors must always be negative. False
11. The centering of explanatory variables about their sample averages before creating quadratics
or interactions forces the coefficient on the levels to be average partial effects - True
12. The ordinary least square estimators have the smallest variance among all the unbiased
estimators. - True
13. The population parameter in the null hypothesis _____. - is not always equal to zero
14. Two equations form a nonnested model when: neither equation is a special case of the other.
15. Which of the following correctly identifies a limitation of logarithmic transformation of
variables? - Logarithmic transformations cannot be used if a variable takes on zero or
negative values.
16. Which of the following correctly identifies a reason why some authors prefer to report the
standard errors rather than the t statistic? - Having standard errors makes it easier to compute
confidence intervals.
17. Which of the following correctly identifies an advantage of using adjusted R^2 over R^2 ? -
The penalty of adding new independent variables is better understood through adjusted R than
R^2 .
18. Which of the following statements is true when the dependent variable, y > 0? - Models using
log(y) as the dependent variable will satisfy CLM assumptions more closely than models
using the level of y.
19. Which of the following statements is true? - Taking a log of a nonnormal distribution yields a
distribution that is closer to normal.
20. Which of the following tools is used to test multiple linear restrictions? F test
21. True

22. If a regression equation has only one explanatory variable, say x , its standardized coefficient
must lie in the range: -1 to 1
23. Which of the following statements is true? The upper bound of the confidence interval for a
regression coefficient, say â , is given by B1 + [Critical value × standard error (B1 )].
24. Which of the following correctly defines F statistic if SSR represents sum of squared
residuals from the restricted model of hypothesis testing, SSR represents sum of squared
residuals of the unrestricted model, and q is the number of restrictions placed?

25. Whenever the dependent variable takes on many values it is close to a normal distribution -
True
26. Which of the following correctly represents the equation for adjusted R^2?

27. A change in the unit of measurement of the dependent variable in a model does not lead to
change in: the goodness-of-fit of the regression
28. A variable is standardized in the sample:by subtracting off its mean and dividing by its
standard deviation.
29. An independent variable can be included in a regression model: when it affects y and is
uncorrelated with all of the independent variables of interest
30. F statistic can be used to test nonnested models - False
31. Residual analysis refers to the process of: examining individual observations to see whether
the actual value of a dependent variable differs from the predicted value
32. Standardized coefficients are also referred to as: beta coefficients.
33. The normality assumption implies that:the population error u is independent of the
explanatory variables and is normally distributed with mean zero and variance ơ
34. Which of the following is a statistic that can be used to test hypotheses about a single
population parameter - t statistic
35. Which of the following is true of confidence intervals? Confidence intervals are also called
interval estimates.
36. Which of the following models is used quite often to capture decreasing or increasing
marginal effects of a variable? - Models with quadratic functions
37. Which of the following statements is true of confidence intervals? Confidence intervals in a
CLM provide a range of likely values for the population parameter
38. Which of the following statements is true of hypothesis testing?- a restricted model will
always have fewer parameters than its unrestricted model

39.
40. If the calculated value of the t statistic is greater than the critical value, the null hypothesis,
H0 is rejected in favor of the alternative hypothesis H1 - True

1. If an independent variable in a multiple linear regression model is an exact linear combination

of other independent variables, the model suffers from the problem of: c. perfect collinearity

2. Which of the following is true of R^2 ? shows what percentage of the total variation in the
dependent variable, Y, is explained by the explanatory variables.

3. Which Of the following statements is true? The F statistic is always nonnegative as SSRris
never smaller than SSRur.

4. The significance level of a test is? the probability Of rejecting the null hypothesis when it is
true.

5. Which Of the following is true Of confidence intervals? Confidence intervals are also called
interval estimates.

6. A data set that consists Of a sample Of individuals, households, firms, cities, States,
countries, or a variety Of other units, taken at a given point in time, is called a(n): cross-sectional
data set

7. If a change in variable x causes a change in variable y, variable x is called the: explanatory

variable
8. An explanatory variable is said to be exogenous if it is correlated with the error term. False

9. An independent variable can be included in a regression model: when it affects y and is

uncorrelated with all of the independent variables of interest.

10. The general t statistic can be written as: (estimate — hypothesized value)/ standard error

11. Which of the following is a difference between panel and pooled cross-sectional data?A panel
data set consists of data on the same cross-sectional units over a given period of time while a
pooled data set consists of data on different cross-sectional units over a given period of time

12. Which of the following statements is true? The upper bound of the confidence interval for a
regression coefficient, say åj, is given by Bj + [critical value x standard eror(Bj)]

13. Suppose the variable x has been omitted from the following regression equation y = B0
+B1x1 + B2x2 +u. B1 is the estimator obtained when x2 is omitted from the equation. The bias in
B1 is positive if : B2> O and x1 and x2 are positively correlated

14. A change in the unit of measurement of the dependent variable in a model does not lead to a
change in: the goodness-of-fit of the regression.

15. If the calculated value of the t statistic is greater than the critical value, the null hypothesis,
HO is rejected in favor of the alternative hypothesis, H1. True

16. In the equation y = B0 + B1x + u, B0 is the intercept parameter

17. The error term in a regression equation is said to exhibit homoskedasticty if it has the same
variance for all values of the explanatory' variable

18. In the following equation, gdp refers to gross domestic product, and FDI refers to foreign
direct investment. If bank credit increases by 1%, gdp increases by 0.527%, the level Of FDI
remaining constant.

19. Which of the following refers to panel data? Data on the birth rate, death rate and population
growth rate in developing countries over a 10-year period.

20. Consider the following regression equation: y = B + B1x1 + B2x2 +u. What does B1 imply?
B1 measures the ceteris paribus effect of x1 on y .

21. Which of the following correctly identifies an advantage of using adjusted R^2 over R^2 The
penalty of adding new independent variables is better understood through adjusted R^2 than R^2

22. The Gauss-Markov theorem will not hold if the independent variables have exact linear
relationships among them

23. Consider the equation y = B + B1x1 + B2x2 +u. A null hypothesis, Ho: B2= O states that: x2
has no effect on the expected value of y.
24. Which of the following models is used quite often to capture decreasing or increasing
marginal effects of a variable? Models with quadratic functions

25. If the residual sum of squares (SSR) in a regression analysis is 66 and the total sum of
squares (SST) is equal to 90, what is the value of the coefficient of determination? 0.27

26. If a new independent variable is added to a regression equation, the adjusted R2 increases
only if the absolute value of the t statistic Of the new variable is greater than one. True

27. Which of the following statements is true of hypothesis testing? A restricted model will
always have fewer parameters than its unrestricted model.

28. Which Of the following correctly identifies a limitation Of logarithmic transformation Of

variables? Logarithmic transformations cannot be used if a variable takes on zero or negative
values.

29. Which of the following is an example of time series data? data on the gross domestic product
of a country Over a period of 10 years.

30. Changing the unit of measurement of any independent variable, where log of the dependent
variable appears in the regression: affects only the intercept coefficient.