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91-Worksheet - Econometrics I

This document is a worksheet for an econometrics course. It contains multiple choice and true/false questions to test students' understanding of econometrics concepts. It also includes practice problems for students to work through, showing calculations and steps. The problems cover topics like regression analysis, hypothesis testing, and diagnosing for issues like autocorrelation. Students are to complete the worksheet independently and submit it for evaluation to help assess their comprehension of the course material.

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Bereket Desalegn
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770 views6 pages

91-Worksheet - Econometrics I

This document is a worksheet for an econometrics course. It contains multiple choice and true/false questions to test students' understanding of econometrics concepts. It also includes practice problems for students to work through, showing calculations and steps. The problems cover topics like regression analysis, hypothesis testing, and diagnosing for issues like autocorrelation. Students are to complete the worksheet independently and submit it for evaluation to help assess their comprehension of the course material.

Uploaded by

Bereket Desalegn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as RTF, PDF, TXT or read online on Scribd
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Unity University - College of Distance Education Work sheet for Econometrics I-91

UNITY UNIVERSITY
COLLEGE OF DISTANCE AND CONTINUING EDUCATION
DEPARTMENT OF ECONOMICS
ECONOMETRICS I (Econ 2061)

91
WORKSHEET

Name: _________________________________________________________

ID No.________________________________________________________

Centre:___________________ Semester ____________ Academic Year ____________

This is a test paper you are expected to do on your own. It carries 25 points. The test paper should
be completed and mailed to the School of Distance and Continuing Education for evaluation. Do
not try to complete the worksheet until you have covered all the lessons and exercises in the course
material.

Any questions in the course that you have not been able to understand should be stated on a
separate sheet of paper and attached to this worksheet. Your tutor will clarify them for you.

After completing this test paper, be certain to write your Name, Id No and Address on the first
page. Your Name and Id No on the other pages only.

1
Unity University - College of Distance Education Work sheet for Econometrics I-91

Part I: Write “True” if the statement is correct and “False” if the statement is
incorrect on the answer sheet provided. (0.5 pt each)
1. The coefficient of determination (R2 ) and the sum of the square of the error term
( ) are inversely related.
2. Under a t-test, as a rule of thumb we reject the null hypothesis and accept the
alternative if the computed t-value is greater than or equal to /2/.
3. Economic model assumes the relationship between economic variables to be
exact.
4. The partial correlation is used to compute the association between variables in a
simple regression model.
5. The value of R2 is always less than or equal to the adjusted R2

Part II: Choose the best answer and write the letter of your choice on the space
provided. (0.5point each)
1. Which one is a more serious problem in cross-section data?
A. Autocorrelation
B. Multicollinearity
C. Hetroscedasticity
D. None
2. Which one is NOT necessarily true?
A.∑ei=0 C.∑yi=0
B.∑xi=0 D.∑ei2=0
3. It is measure of joint or overall significant test of parameters
A.t-test B. R2test C.F-test D. Adjusted R2
4. Auxiliary regression is a detection mechanism for the presence of the violation of
which econometrics assumption?
A. The error terms are normally distributed
B. The variance of the error terms is constant
C. Successive values of the error terms are unrelated
D. The error terms are not perfectly linearly related

2
Unity University - College of Distance Education Work sheet for Econometrics I-91

5. The following assumptions of the OLS estimation method are applicable to the
simple linear regression model all except
A. Noautocorrelation C. No Multicollinearity
B. Nohetroscedascity D. Normality
6. Suppose the variance of the error term equals 14 while the number of parameters
and the value of ∑ei2 are 4 and 70 respectively. Then the number of observations (n)
equals:
A. 9 B.180 C.56 D. 17.5
7. During diagnostic test, obtaining a high and exaggerated value of R 2 is the most
commonly used suspicious mechanism for the presence of;
A. Multicollinearity problem C. Hetroscedasticity problem
B. Misspecification of the model D. Autocorrelation problem
Given the following data answer question No. 8 up to 12:
∑xy=255 Ῡ=7 ∑(et - et-1)2 =60.21

∑x2=280 X=8 ∑et2=41.767

∑y2=274 n=15

8. The intercept and the slope are_________and___________respectively.


A. 0.59, 1.26
B.0.33, 0.122
C.-0.28, 0.90
D.-0.11, 1.26
9. The Durbin- Watson value approximately equals to
A. 1.441 B. 0.6936
C. 0.046 D. 0.096
10. The level of autocorrelation problem observed with the above estimation
result is:
A. No autocorrelation
B. Some negative autocorrelation
C. Some positive autocorrelation
3
Unity University - College of Distance Education Work sheet for Econometrics I-91

D. Perfectly positive autocorrelation


11. Which of the following test will not be applied to the above estimated function?
A. Standard error test
B. Student t-test
C. Confidence Interval test
D. Z-test
12. The R2 value equals:
A. 95 % B. 20% C. 80% D.
84.7%
13. Which one of the following statement is not true about the level of
significance/degree of tolerance?
A. It refers to the probability of making wrong decision.
B. It is the probability of rejecting the null hypothesis
C. It is the probability of making committing Type I error.
D. It is the probability of making committing Type II error.
14. Identify the wrong statement about p-value test
A. A parameter which is significant at 1% is also significant at 10%.
B. A parameter which is significant at 5% is also significant at 10%.
C. A parameter which is significant at 1% is also significant at 5% and 10%.
D. A parameter which is significant at 5% is also significant at 1%.
15. The mean value of the random variable (U) in any particular period is zero
implies all of the following except
A. For each value of x, the random variable (u) may assume various values, some
greater than zero and some smaller than zero.
B. If we considered all the possible and negative values of u, for any given value
of X, they would have on average value equal to zero.
C. E(U i )=0
D. Cov(ui u j )=0
Part III: Discuss the following questions briefly.
1. What are the 4 major steps in Econometrics research?(1 point)
2. What are the basic techniques of identifying multicollinearity problem?(2 point)
3. Write the possible causes for Hetroscedasticity problem with its appropriate
solutions (2point)
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Unity University - College of Distance Education Work sheet for Econometrics I-91

4. State the Gauss-Markov Theorem and describe the associated properties of the
OLS estimators. (1.5 point)

Part IV: Solve the following questions. Show all the necessary steps clearly.
1. Consider the following estimated function for n =12
Y= 31.76 +0.71X
A) Calculate the point-estimate of Y for X=850 (0.5 point)
B) Suppose the estimated standard error of the slope is 5.68, construct the 95%
confidence interval for the slope. (0.5 point)
C) What can you say about the significance of the slope? (0.5 point)
2. Suppose we have a data on wheat yield (Y), amount of fertilizer applied(X1),
amount of rainfall(X2). It is assumed that the fluctuations in yield can be
explained by varying levels of rainfall and fertilizer. A researcher has obtained
the following summarized data.
Ῡ=60 ∑x1y=16,500 ∑x12 =280,000
X1=400 ∑x2y=600 ∑x22=400
X2=20 ∑x1x2=7,000 ∑y2=1150
∑(et-et-1)2 =45 ∑et 2 =21 n=7

A. Determine the regression equation for the above estimate. (0.5 point)
B. Calculate the variance of the error term, the intercept and the slopes.(1.5 point)
C. Develop a hypothesis for the slopes and conduct an individual statistical
significance test using the student t-test at 5% level of significance. (1.5 point)
D. Compute the R2 and interpret it. (0.75 point)
E. Compute the adjusted R2 and interpret it. (0.75 point)
F. Test the overall /joint significance of the parameters at 5% level of significance.
(1 point)
G. Conduct a test for the presence of Autocorrelation problem with the estimated
model. (0.5 point)
H. If there is an autocorrelation problem with the above model what can you suggest
to solve the problem? (0.5 point)

5
Unity University - College of Distance Education Work sheet for Econometrics I-91

Answer Sheet
Part I: True or False
1. _________
2. _________
3. _________
4. _________
5. _________

Part II: Multiple Choices


1. ______ 6. ______ 11. _____
2. ______ 7. ______ 12. _____
3. ______ 8. ______ 13. _____
4. ______ 9. ______ 14. _____
5. ______ 10. ______ 15. _____

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