Econometrics exam1

True FEEDBACK: If the p-value of an F statistic 2.63 is 0.034, then we can say that the problem of interest is significant at the 5% level.​

(True / False) If the p-value of an F statistic 2.63 is 0.034, then we can say that the problem of interest is significant at the 5% level.​

True. The dummy variable coefficient for a particular group represents the estimated difference in intercepts between that group and the base group.

(True / False) The dummy variable coefficient for a particular group represents the estimated difference in intercepts between that group and the base group.

FALSE. A dummy variable trap arises when too many dummy variables describe a given number of groups.

(True / False) A dummy variable trap arises when a single dummy variable describes a given number of groups.

Dummy. FEEDBACK: A dummy variable or binary variable is used to incorporate qualitative information in a regression model.

A _____ variable is used to incorporate qualitative information in a regression model.

​the functional form of the regression model is misspecified

A test for heteroskedasticty can be significant if _____.​

y indicates whether an adult is a college dropout. The dependent variable, y is binary if it is used to indicate a qualitative outcome.

Consider the following regression equation: y = β_0+ β_1x_1+ ...+ βk x_k + u In which of the following cases, the dependent variable is binary?

the predicted change in the probability of success when x1 increases by one unit, everything else remaining constant. FEEDBACK: A binary dependent variable is used when a regression model is used to explain a qualitative event. The dependent variable takes a value of 1 when the event takes place (success) and it takes a value of zero when the event does not take place. The coefficient of an independent variable in this case measures the predicted change in the probability of success when the independent variable increases by one unit.

In the following regression equation, y is a binary variable: y = β_0+β_1x_1+...β_k x_k+ u In this case, the estimated slope coefficient for x1, measures _____.

dummy variable trap FEEDBACK: The inclusion of another dummy variable in this model would introduce perfect collinearity and lead to a dummy variable trap.

The following simple model is used to determine the annual savings of an individual on the basis of his annual income and education. Savings = β_0 + δ_0 Edu + β_1Inc + u The variable 'Edu' takes a value of 1 if the person is educated and the variable 'Inc' measures the income of the individual. Refer to the model above. The inclusion of another binary variable in this model that takes a value of 1 if a person is uneducated, will give rise to the problem of _____.

t = (Estimate - Hypothesized Value) / SE

The general form of the t statistic is _____.

4. Rationale: FEEDBACK: If a regression model is to have different intercepts for, say, g groups or categories, we need to include g -1 dummy variables in the model along with an intercept. In this case, the regression equation should include 5-1=4 dummy variables since there are 5 ethnic groups.

The income of an individual in Budopia depends on his ethnicity and several other factors which can be measured quantitatively. If there are 5 ethnic groups in Budopia, how many dummy variables should be included in the regression equation for income determination in Budopia?

A dependent variable can be binary. FEEDBACK: A dependent variable is binary if it has a qualitative meaning.

Which of the following is true of dependent variables?

The model can produce predicted probabilities that are less than zero and greater than one.

Which of the following problems can arise in policy analysis and program evaluation using a multiple linear regression model?