ex02_answer_econ120b_w08

ex02_answer_econ120b_w08 - Economics 120B Professor Yongil...

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Economics 120B Name: _________________________ Professor Yongil Jeon Winter 2008, March 3 Student ID#: _________________________ Answer to Exam #2 – Winter 2008: Econometrics 120B 1. (15 points) A multiple regression includes two regressors: i i i i X X Y ε β + + + = 2 2 1 1 0 (i) What is the expected change in i Y if i X 1 increases by 3 units and i X 2 unchanged? (ii) What is the expected change in i Y if i X 2 decreased by 5 units and i X 1 is unchanged? (iii) What is the expected change in i Y if i X 1 increases by 3 units and i X 2 decreased by 5 units? Answer If i X 1 increases by 3 units and i X 2 unchanged, then i Y is expected to change by 1 3 units. If i X 2 decreased by 5 unites and i X 1 is unchanged, then i Y is expected to change by 2 5 units. If i X 1 increases by 3 units and i X 2 decreased by 5 unites, then i Y is expected to change by 2 1 5 3 units. 2. (15 points) Consider the regression model i i i i u X X Y + + + = 2 2 1 1 0 . Transform the regression to use a t-statistic to get 12 1 + =− . Answer 1 += (Hint: You must define the dependent variable in the regression). 012 1 θ ββ =++ . Thus, 102 1 θβ =−− 00 2 2 (1 ) ii i i YX X u =+ −− + + () 10 0 21 i iii X X X u βθ + + + And test whether 0 0 = .
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2 Answer to EXAM #2, ECON 120B, Winter 2008 2 3 . (20 points) The following simple linear regression model was estimated explaining a firm's sales revenue to the income of its customer’s (INC) using annual data over a nine- year period: Sales Revenue = 81.38 + .23(INC), (0.018)
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This note was uploaded on 06/09/2010 for the course ECON 120B taught by Professor Jeon during the Spring '08 term at UCSD.

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ex02_answer_econ120b_w08 - Economics 120B Professor Yongil...

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