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practice_test1 - Practice Problems for Test 1 Econ 3200...

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Practice Problems for Test 1 Econ 3200 - Introduction to Econometrics Spring 2010 Cornell University Prof. Molinari This practice problems have two parts totaling 100 points. I will maintain the same structure for the Test 1 that I am preparing for your class. The exam will be a CLOSED BOOK exam. However, useful formulas will be provided on pages 4+. Calculators are permitted °but graphing calculators are prohibited. You will have 75 minutes to complete the exam. SHOW ALL your work as partial credit will be given. Answers without explanations might NOT be given (full) credit even if they are correct. Part I: Short Answer (20 points, 4 points each) In a few sentences, brie±y de²ne/describe the following. Use formulas if you think they will make your answers more precise, but a formula without a written explanation is not an acceptable answer. a) Convergence in Probability (i.e. p lim ) b) Least Squares Estimator c) Con²dence Interval (non-rejection region) d) Unbiased Estimator e) Gauss Markov Theorem
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Part II: 2 Long Questions, 80 Points (40 points each) 1. (40 points) All else equal, we would expect people with greater ability to earn higher wages. A common but crude measure of ability is results of IQ tests. This question explores the relationship between IQ test scores and hourly wages. Let ln( wage ) denote the natural logarithm of hourly wages. Let ln( IQ ) denote the natural logarithm of IQ. Using a random sample of 935 people, the following regression model estimates were obtained using OLS. (Standard errors for each estimate are given in parentheses.) ln( wa b ge i ) = ° 1 : 87 + 0 : 75 ln( IQ i ) R 2 = 0 : 067 (0 : 42) (0 : 091) Assume for now that Assumptions SLR.1-SLR.5 hold.
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