Multiple Choice Test Bank Questions No Feedback – Chapters 11
and 12
Correct answers denoted by an asterisk.
1. Which of these are advantages of using panel data?
(I) We can address a broader range of issues and tackle more complex problems than
would be possible with pure time-series or pure cross-sectional data alone
(II) It allows us to increase the number of degrees of freedom
(III) It allows us to increase the power of the tests
(IV) We can remove the impact of certain forms of omitted variables bias in
regression results
2. Which of these is a type of panel estimator approach?
(I) Fixed effects
(II) Random effects
(III) Seemingly unrelated regression effects
(IV) Time-varying effects
3. Entity fixed effects models
4. Running a cross-sectional regression on the time-averaged values of the variables is
known as a:
5. The acronym LSDV in panel model estimation stands for
6. Which of the following is a mathematical expression of a time-fixed effects model?
7. What of the following is a mathematical expression of a random effects model?
8. To test for unit roots in panel data, Levin, Lin and Chu (2002) develop a test based
on the equation
, , 1 , 1i t i t i i i t i i t it
y t y y v
−−
= + + + + +
. What is the appropriate
null hypothesis for this test?
9. Logit and probit models are more appropriate than linear probability models
because:
10. Which of the following statements about logit and probit models is true?
(I) They cannot be estimated by ordinary least squares
(II) They can be estimated using maximum likelihood
(III) They can be estimated using non-linear least squares
11. If the maximised value of the log-likelihood function for a logit model is 34.55
and for a restricted model where all of the slope parameters are set to zero is 30.67,
what is the pseudo-R2?
12. Appropriate modelling of limited dependent variables that are assigned numerical
values having a natural ordering can be done using:
(I) Probit models
(II) Logit models
(III) Ordered probit models
(IV) Ordered logit models