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Midterm Code 1

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2 views

Midterm Code 1

Uploaded by

minhbx3
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. MULTIPLE CHOICE.

Choose the one alternative that best completes the statement or


answers the question. Be sure to write your answer in the table provided above (7 points)

1) In the regression model: Wage 𝛃0 + 𝛃1Education + u, the intercept 𝛃0


A) represents the mean wage when education is set to zero
B) represents the mean wage at the mean level of education
C) indicates the mean wage for those with the lowest level of education
D) indicates the mean wage for those with the highest level of education
2) In the regression model: wage = 𝛃0 +𝛃1exper + u, the assumption Cov(u | exper) =
0 means that
A) the sample mean of the exper variable equals the sample mean of the errors
B) dividing the error by the exper variable results in a zero (on average)
C) the residuals are uncorrelated with exper variable
D) given any values of exper variable, the error has a zero mean
3) You are given a regression model that satisfies OLS assumptions 1 form 3. For
assumption 4, you find that Cov(u | x) = 0. Your OLS estimator will be
A) BLUE
B) biased and consistent
C) unbiased and inconsistent
D) biased and inconsistent
4) Which of the following assumptions is NOT necessary for OLS estimators to be
Unbiased?
A) there is no perfect multicollinearity among explanatory variables
B) the variance of the error is constant, given any values of the explanatory
variables
C) the data is taken from a random sample
D) the expected value of the error is zero given ant values of the explanatory
variables
5) An omitted variable bias occurs when
A) a model omitted a variable that has no partial effect on Y and is highly
correlated with other explanatory variables
B) a model omitted a variable that has a negative effect on Y and is uncorrelated
with other explanatory variables
C) a model omitted a variable that has a positive effect on Y and is uncorrelated
with other explanatory variables
D) a model omitted a variable that has a negative effect on Y and is negatively
correlated with other explanatory variables
6) Consider the following regression model, where married in a dummy variable
(1=married, 0 =single), exper is a continuous variable and the interaction term is
married + exper
wage = 𝛃0 + 𝛃1exper + 𝛃2married + 𝛃3married * exper + 𝛃4edu + u
In this model, 𝛃3 is
A) the difference in mean wages between married and single workers
B) the difference in the effect of exper on wages between married and single
workers
C) the difference in the intercepts between married and single workers
D) the effect of exper on wages for both married and wingle workers
7) In the multiple linear regression model, the precision of the slope coefficients will
increase if
A) we have observations
B) there is very little variation in the values of explanatory variable
C) explanatory variables are highly correlated with each other
D) there are more measurement errors in the dependent variable

2. CALCULATION
8) Consider the following model for factors affecting income per capita
Income = 82023 + 215 Kinh + 130 Edu+ 90 Kinh * Edu - 25 * Age - 0.25 * Age ^2
Where household income per capita (per month) is measured in thousands of VND:
Kinh is a dummy variable ( 1=Kinh households; 0= ethnic minority households); Edu
is a continuous variable (years of education); Kinh*Eu is an interaction term; Age is a
continuous variable measured in years and Age ^2 is the squared term of Age.

A) Please interpret the effect of education on income for ethnic minority


households and Kinh households

B) Holding all other factors fixed, how much will income change if age
increases from 20 to 21 years?
C) What is the turning point for the effect of age on income? In this case, does
the quadratic relationship show a diminishing or increasing effect?

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