308BDC75d01 - Chapter 4 Linear Regression with One Regressor Multiple Choice 1 When the estimated slope coefficient in the simple regression model

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1 Chapter 4 Linear Regression with One Regressor Multiple Choice 1) When the estimated slope coefficient in the simple regression model, 1 ˆ β , is zero, then a. R 2 = Y . b. 0 < R 2 <1 . c. R 2 =0 . d. R 2 >( SSR / TSS ). Answer :c 2) Heteroskedasticity means that a. homogeneity cannot be assumed automatically for the model. b. the variance of the error term is not constant. c. the observed units have different preferences. d. agents are not all rational. Answer :b 3) With heteroskedastic errors, the weighted least squares estimator is BLUE. You should use OLS with heteroskedasticity-robust standard errors because a. this method is simpler. b. the exact form of the conditional variance is rarely known. c. the Gauss-Markov theorem holds. e. your spreadsheet program does not have a command for weighted least squares. Answer 4) (Requires Appendix Material) Which of the following statements is correct? a. TSS = ESS + SSR b. ESS = SSR + TSS c. ESS > TSS d. R 2 =1–( ESS / TSS ) Answer :a
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2 5) Binary variables a. are generally used to control for outliers in your sample. b. can take on more than two values. c. exclude certain individuals from your sample. d. can take on only two values. Answer :d 6) When estimating a demand function for a good where quantity demanded is a linear function of the price, you should a. not include an intercept because the price of the good is never zero. b. use a one-sided alternative hypothesis to check the influence of price on quantity. c. use a two-sided alternative hypothesis to check the influence of price on quantity. d. reject the idea that price determines demand unless the coefficient is at least 1.96. Answer :b 7) The reason why estimators have a sampling distribution is that a. economics is not a precise science. b. individuals respond differently to incentives. c. in real life you typically get to sample many times. d. the values of the explanatory variable and the error term differ across samples. Answer 8) In the simple linear regression model, the regression slope a. indicates by how many percent Y increases, given a one percent increase in X . b. when multiplied with the explanatory variable will give you the predicted Y . c. indicates by how many units Y increases, given a one unit increase in X . d. represents the elasticity of Y on X . Answer :c
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3 9) The OLS estimator is derived by a. connecting the Y i corresponding to the lowest X i observation with the Y i corresponding to the highest X i observation. b. making sure that the standard error of the regression equals the standard error of the slope estimator. c. minimizing the sum of absolute residuals. d. minimizing the sum of squared residuals. Answer :d 10) Interpreting the intercept in a sample regression function is a. not reasonable because you never observe values of the explanatory variables around the origin.
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This note was uploaded on 03/11/2010 for the course ECON 101 taught by Professor Sam during the Spring '08 term at Academy of Art University.

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308BDC75d01 - Chapter 4 Linear Regression with One Regressor Multiple Choice 1 When the estimated slope coefficient in the simple regression model

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