The expected value of a random variable is
a.) the probability weighted mean
b.) a measure of central tendency of the pdf
c.) average value that occurs in many repeated trial of an experiment
d.) all of the above
The following economic model predicts whether a voter will vote for an incumbent
school board member INCUMBENT = 1 + 2MALE + 3PARTY + 4MARRIED +
5KIDS
where
INCUMBENT = 1 if the voter votes for them, 0 otherwise,
MALE = 1 if the voter is a male,
PARTY indicates the voter is registered with the same political party as the incumbent,
MARRIED = 1 for married voters, 0 otherwise, and
KIDS is the number of school age kids living with the voter.
What is the probability that a married female without kids who is not registered with a
political party will vote for the incumbent?
a.) 1 + 4
b.) 1
c.) 1 + 2 + 3 + 5
d.) 2 + 3 + 5
How does including an irrelevant variable in a regression model affect the estimated
coefficient of other variables in the model?
a.) they are biased downward and have smaller standard errors
b.) they are biased upward and have larger standard errors
c.) they are biased and the bias can be negative or positive
d.) they are unbiased but have larger standard errors
If you perform a Chow test to compare two regressions and reject the null hypothesis,
what should you conclude?
a.) there is not sufficient evidence that the regressions are significantly different
b.) the regression equations are statistically different
c.) the regression equations are equivalent
d.) it depends on how you set up the null hypothesis
Which assumption must be true when E(e x) = 0?
a.) E(e) = 0 and var(e) = 2
b.) e = 0
c.) E(e) = 0 and cov(x,e) = 0.
d.) E(e) = e|x if x0
What does a p-value NOT tell you?
a.) The size of the largest rejection region that would not contain the observed test
statistic
b.) The probability that the null hypothesis is true and you would observe a test statistic
more extreme than the one observed
c.) The highest value of a for which you cannot reject the null hypothesis based on the
data
d.) The probability that the null hypothesis is true
What does NBER stand for?
a.) Northern Banks Emergency Reserves
b.) Normally Balanced Econometric Regression
c.) National Bureau of Economic Research
d.) National Business and Economic Regulators
In a system of M simultaneous equations, at least M-1 variables must be excluded from
each equation for the equation to be identified. What does it mean if the equation is not
identified?
a.) unique coefficient estimates for each variable cannot be identified using least
squares
b.) the economic value of the predicted value cannot be identified
c.) the economic relationships are unclear and the equation should be dropped form the
system
d.) the exogenous variables have been incorrectly identified
You have estimated a regression model and your printout includes the following
information
xy= 3614.00
x= 12.72
y= 394.61
SST = 758912.00.
Use this information to calculate SSE.
a.) 546,416.64
b.) 212,495.36
c.) 381.89
d.) 5019.44
The LM (Lagrange Multiplier) test generates a test statistic N * R2 2
(S-1). To what
does the S in this distribution refer?
a.) the number of explanatory variables in the auxiliary regression
b.) the number of explanatory variables in the initial model
c.) N-K-the degrees of freedom in econometric model of interest
d.) the statistical significance level chosen for the LM test
In an ARCH(1) model E(ytxt-1) has a _____________ distribution while E(yt) has a
____________ distribution.
a.) leptokuric, normal
b.) binomial, leptokuric
c.) normal, binomial
d.) normal, leptokuric
How can you estimate non-linear function forms using least squares?
a.) estimate the linear approximation over small ranges at a time
b.) transform, such as squaring or cubing, some explanatory variables.
c.) use a very large sample so you do not have to assume the error terms are normally
distributed
d.) It cannot be done. You need to use another estimation technique.
How are logit and probit models different?
a.) probit is estimated by least squares, logit by maximum likelihood
b.) probit uses the cumulative density function (cdf) of the standard normal distribution
and logit uses the cdf of the logistic function
c.) logit is for binary choice models and probit is used when there are two or more
choices
d.) probit allows for endogenous regressors, logit does not
When should a Heckit model be used?
a.) when the sample was not randomly selected
b.) when the sample is small and error terms are not normally distributed
c.) as the alternative model to run a Hausman test on a Tobit model
d.) to minimize the variance of the error term when the sample selection process is
suspect
Which of these assumptions means all error terms are uncorrelated?
a.) E(eit) = 0
b.) var(eit) = E(e2
it) = 2
c.) cov(eit, ejs) = E(eit, ejs) = 0 for i j or t s
d.) cov(eit, x2it) = 0, cov(eit, x3it)
If you reject the null hypothesis when performing a Hausman test, what should you
conclude?
a.) at least one of the explanatory variables is endogenous
b.) there are no endogenous variables
c.) the 2SLS estimation has corrected the endogeneity in the initial model
d.) the 2SLS second stage equation still has endogenous variables
For which distribution is the mean equal to the variance?
a.) standard normal
b.) binomial
c.) Poisson
d.) chi-square
How are ARCH models estimated?
a.) OLS
b.) 2SLS
c.) GLS
d.) ML
Which of the following wage premia is modeled with an indicator variable that shifts
the intercept?
a.) height
b.) gender
c.) education
d.) weight
How does the least squares estimator perform on a simultaneous equation model with
an endogenous regressor?
a.) unbiased and consistent in large samples
b.) biased and inconsistent in all sample sizes
c.) biased but consistent in large samples
d.) unbiased but inconsistent unless collected through random sampling