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MIT OpenCourseWare http://ocw.mit.edu 14.30 Introduction to Statistical Methods in Economics Spring 2009 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms .
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Problem Set #8 14.30 - Intro. to Statistical Methods in Economics Instructor: Konrad Menzel Due: Tuesday, April 28, 2009 Question One: Law of Large Numbers and Central Limit Theorem Probably the two most important concepts that you will take away from this course are the Law of Large Numbers and the Central Limit Theorem and how they allow us to use averages to learn about the world around us. I. State the Law of Large Numbers (please, just copy it down from the lecture notes). 2. Explain what the Law of Large Numbers tells us about the average of an i.i.d. (inde- pendent, identically distributed) sample of the random variable X with mean p and variance a2. Suppose you wanted to know the unemployment rate for residents of Cambridge during April 2009. The "unemployed are defined as "Persons 16 years and over who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed." (Source: http://www.econmodel.com/classic/terms/ur.htm .)
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