Econometrics - Questions For Practice
Uploaded by
Nasradin AbdoshEconometrics - Questions For Practice
Uploaded by
Nasradin AbdoshAssosa University
College of Business and Economics
Department of Economics
Econometrics Sample Questions For Exit Exam
1. Which one of the following statements is wrong about (an) economic model(s)
(a) It is a theoretical concept that represents a complex economic process.
(b) It establishes the logical relationship between economic variables.
(c) It posits a certain but inexact relationship between economic variables.
(d) They are qualitative, but by nature, they are based on mathematical models.
2. Which one of the following statements is wrong about econometric model(S)
(a) It’s a statistical concept that describes the numerical estimate of variables in-
volved in an economic process.
(b) It was established to test the validity of economic theories.
(c) It establishes a quantitative relationship between economic variables.
(d) They see randomness as an essential element.
3. Given a simple linear regression model Y = β0 + β1 X + , one of the following state-
ments is true
(a) The unsystematic part of Y explained by X is β0 + β1 X
(b) The systematic part Y unexplained by X is
(c) The systematic part Y explained by X is
(d) The systematic part of Y explained by X is β0 + β1 X
4. Given a simple linear regression model Y = β0 + β1 X + , one of the following state-
ments is true
(a) If E() = 0, then the E(|X) = 0
(b) If the intercept β0 is excluded from the equation,then E() may not be zero.
(c) As long as the intercept β0 is included in the equation, then E() is always zero.
(d) If E(|X) = 0, then E(Y |X) = 0
5. Given the a simple linear regression model, Y = β0 + β1 X + , if the dependent vari-
able,Y, is multiplied by the constant c,
(a) then both the intercept and slope estimates are also multiplied by c.
(b) then only the slope coefficient is multiplied by c.
(c) then only the slope coefficient is divided by c.
(d) then both the intercept and slope estimates are divided by c.
6. Given the a simple linear regression model, Y = β0 + β1 X + , if the independent
variable,X, is multiplied by the constant c,
(a) then both the intercept and slope estimates are also multiplied by c.
(b) then only the slope coefficient is multiplied by c.
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(c) then only the slope coefficient is divided by c.
(d) then both the intercept and slope estimates are divided by c.
7. Given a simple linear regression model Y = β0 + β1 X + , one of the following state-
ments is true
(a) The intercept parameter β0 measures the average change in Y, when X increases
by one unit,other things remain constant.
(b) The slope parameter β1 measures the average change in X, when Y increases by
one unit, other things remain constant.
(c) The intercept parameter β1 measures the average change in Y, when X increases
by one unit,other things remain constant.
(d) The slope parameter β0 measures the average change in Y, when X increases by
one unit,other things remain constant.
8. OLS estimators are derived by
(a) maximizing the sum of squares of the residuals.
(b) by minimizing the sum of absolute values of the residual.
(c) by minimizing the sum of the squared differences between the value of the de-
pendent variable and the independent variable.
(d) by minimizing the sum of squares of the residuals.
9. One of the following specifications is not a linear regression
(a) Y = β0 + β1 X +
(b) Y = β0 X β1 e , where e is exponent.
1
(c) Y = β0 + β1
X +
(d) Y = β0 + β1 X 2 +
10. If the relationship between two variables X and Y is expressed as Y = β0 +β1 log(X)+
, where log(.). Then, the coefficient β1 represents.
(a) the percentage change in Y due to a percentage change in X; other things remain
constant.
(b) the unit change in Y due to a percentage change in X; other things remain con-
stant.
(c) the unit change in Y due to a unit change in X; other things remain constant.
(d) the percentage change in Y due to a unit change in X; other things remain con-
stant.
11. If the relationship between two variables X and Y is expressed as log(Y ) = β0 +
β1 X + , where log(.). Then, the coefficient β1 represents
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(a) the percentage change in Y due to a percentage change in X; other things remain
constant.
(b) the unit change in Y due to a percentage change in X; other things remain con-
stant.
(c) the unit change in Y due to a unit change in X; other things remain constant.
(d) the percentage change in Y due to a unit change in X; other things remain con-
stant.
12. If the relationship between two variables X and Y is expressed as log(Y ) = β0 +
β1 log(X) + , where log(.). Then, the coefficient β1 represents.
(a) the percentage change in Y due to a percentage change in X; other things remain
constant.
(b) the unit change in Y due to a percentage change in X; other things remain con-
stant.
(c) the unit change in Y due to a unit change in X; other things remain constant.
(d) the percentage change in Y due to a unit change in X; other things remain con-
stant.
13. If the relationship between two variables X and Y is expressed as Y = β0 +β1 log(X)+
, where log(.). Then, the coefficient β1 represents.
(a) the percentage change in Y due to a percentage change in X; other things remain
constant.
(b) the unit change in Y due to a percentage change in X; other things remain con-
stant.
(c) the unit change in Y due to a unit change in X; other things remain constant.
(d) the percentage change in Y due to a unit change in X; other things remain con-
stant.
14. let Y = wage, where wage is measured in dollars per hour, and X = educ denote
years of schooling. If an extra year of schooling, say going from 5 to 6 years, increases
wage by, say 8.3%, and the same goes if you went from 11 to 12 years.Then, a model
that gives (approximately) a constant percentage effect is
(a) Y = β0 + β1 X +
(b) log(Y ) = β0 + β1 X +
(c) log(Y ) = β0 + β1 log(X) +
(d) Y = β0 + β1 log(X) +
15. If the wage-education relationship,stated in question 15, is estimated as log(Y
d ) =
0.584 + 0.083X , then how do you interpret the slope coefficient
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(a) another year of education increases log(wage) by 8.3%, other things remain con-
stant.
(b) another year of education increases wage by 8.3%, other things remain constant.
(c) a 1% increase in education increases wage by 8.3%, other things remain constant.
(d) another year of education increases hourly wage by 0.83 dollar, other things re-
main constant.
16. If the wage-education relationship,stated in question 15, is estimated as log(Y
d ) =
4.22 + 0.27log(X), then how do you interpret the slope coefficient.
(a) another year of education increases log(wage) by 27%, other things remain con-
stant.
(b) another year of education increases wage by 0.27%, other things remain con-
stant.
(c) a 1% increase in education increases wage by 0.27%, other things remain con-
stant.
(d) a 1% increase in education increases wage by 27%, other things remain constant.
17. The error term in a regression equation is said to exhibit homoscedasticity if—
(a) it has zero conditional mean.
(b) it has same variance for all values of the explanatory variable(s).
(c) it has the same value for all values of the explanatory variable(s).
(d) the values of the error are serially uncorrelated.
18. An estimator is said to be unbiased if
(a) its value is equal to the true (population) value.
(b) its average value is equal to the true value.
(c) its value converges to the true value as the sample size gets large.
(d) its variance is less than any of other estimators.
19. An estimator is said to be consistent if
(a) its value is equal to the true (population) value.
(b) its average value is equal to the true value.
(c) its value converges to the true value as the sample size gets large.
(d) its variance is less than any of other estimators.
20. An estimator is said to be efficient or best if
(a) its value is equal to the true (population) value.
(b) its average value is equal to the true value.
(c) its value converges to the true value as the sample size gets large.
(d) its variance is less than or equal to any of other estimators.
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