While working with the sales manager of your firm you have estimated the following
model of sales volume as a function of monthly household income:
(0.781) (0.392)
Where Q is monthly sales volume, I is monthly household income in thousands, and
standard errors are listed below the parameter estimates.
What does the model predict sales volume to be if using the corrected predictor when
income is $4000 per month?
a.) 708,133.68
b.) 723,146.11
c.) 163.73
d.) 167.20
What is the first stage of 2SLS?
a.) estimate parameters of reduced form equations and find predicted values
b.) find a random sample large enough to divide into 2 separate samples for the two
stages
c.) estimate parameters of the structural equations using OLS
d.) use reduced form parameter estimates as explanatory variables
What is the primary advantage of using panel data rather than a large cross- section data
set collected over time?
a.) it allow you to control for individual heterogeneity
b.) it allows the effects of legislation to be estimated
c.) it gives you more degrees of freedom
d.) it allow coefficients to vary over time
Treatment effects can be estimated from natural or quasi-experiments using which
estimator?
a.) Restricted least squares
b.) Difference-in-differences estimator
c.) Fixed effects
d.) Quasi-Likelihood
How are coefficient estimates from WLS (weighted least squares) interpreted?
a.) they must be scaled up by the weight used in order to calculate marginal effects
b.) there is no difference in interpretation since each observation is scaled by the same
divisor
c.) take the inverse of the natural logarithm of the coefficient to find marginal effects
d.) They should only be used for hypothesis testing. Coefficient estimates from the
un-weighted, original model should be used for prediction.
Refer to the following equation:
where Q is annual quantity supplied, P is the price of the product, P is the price of
resources, P is the price of goods that are substitutes in production, and TAX is the
excise tax on the product. In this equation represents
a.) a parameter to be estimated
b.) the random error term
c.) the predicted quantity supplied
d.) the equilibrium quantity
You have estimated the following equation using OLS:
where y is annual income in thousands and MALE is an indicator variable such that it is
1 for males and 0 for females. According to this model, what is the average income for
females? a.) $33,750
b.) $35,200
c.) $32,300
d.) cannot be determined
You have the following economic model
y = 1+ 2x + 3x2
If b2 is positive and b3 is negative what is the general shape of F(x)?
a.) U-shape
b.) Inverted U
c.) Sigmoid
d.) rectangular hyperbola
Which of the following assumptions must be made in order to use the pooled least
squares estimator, but is relaxed in the cluster robust model?
a.) E(eit) = 0
b.) var(eit) = E(e2
it) = ï³ï€²
c.) cov(eit, ejs) = E(eit, ejs) = 0 for i j or t s
d.) cov(eit, x2it) = 0, cov(eit, x3it)
A model estimated using a dataset with 125 observations generates the following
results.
What test statistic would you use to test the hypothesis b5≥.25?
a.) 1.2147
b.) 5.3327
c.) 1.2948
d.) 0.0607
What is the difference between the Dickey-Fuller Tests 1, 2, and 3?
a.) they test for stationarity around zero, stationarity around a constant, and stationarity
around a trend line, respectively
b.) they test <1, >1, and =1, respectively
c.) they use t, , and F tests, respectively
d.) they test for integration of orders 1, 2 and 3 respectively.
Which of the following sections usually comes first in a research report?
a.) state of problem
b.) description of data
c.) review of literature on the topic
d.) economic model
Which of the following is a common way to convert a nonstationary series to a
stationary series?
a.) first differencing
b.) cointegrating
c.) running a spurious regression
d.) estimating distributed lags
What is the tradeoff researchers face when deciding how to deal with
heteroskedasticity?
a.) Goldfeld-Quandt overstates heteroskedasticity but LM leads to more Type I errors
b.) White’s robust estimator should be used for hypothesis testing, but GLS is better for
interval estimation
c.) GLS gives minimum variance, but results are more difficult to interpret
d.) White’s robust estimator requires no assumptions about the structure of the variance,
but it is not as efficient as GLS estimates when the right structure is imposed on the
variance
Which non-stationary time series has a constant mean but non-constant variance?
a.) random walk
b.) AR(1) with linear trent
c.) random walk with drift
d.) deterministic trend
Which of the following is not a component of a hypothesis tes?
a.) null hypothesis
b.) goodness-of-fit
c.) test statistic
d.) rejection region
If you have heteroskedasticity such that the sample can be divided into groups with
each group having a different error variance, what estimation technique should be used?
a.) FGLS-feasible generalized least squares
b.) WLS-Weighted least squares
c.) White’s robust estimator
d.) log-linear least squares
What is the null hypothesis of the Dickey-Fuller Test 1?
a.) the series is non-stationary over time
b.) the series is stationary
c.) the series is first order integrated
d.) the series are cointegrated
The parameters estimated using econometric methods are generally used for
___________________ or _____________________.
a.) testing hypotheses, predicting
b.) confirming, denying effects of policy.
c.) validation, repudiation.
d.) generating data, probability distributions.
What is the 2nd stage of 2SLS?
a.) estimate parameters of reduced form equations and find predicted values
b.) find a random sample large enough to divide into 2 separate samples for the two
stages
c.) estimate parameters of the structural equations using predicted values from reduced
form equations
d.) use reduced form parameter estimates as explanatory variables