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725_sample exam_1_2010

725_sample exam_1_2010 - ECON 725 2010 SPRING SAMPLE EXAM 1...

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1 ECON 725 SAMPLE EXAM 1 S.C. AHN 2010 SPRING Q1. (40 pts.; 5 pts. on each.) Consider the following statements independently. State clearly whether you agree (A) or do not agree (DNA). If you do not agree, explain why not (2-3 line-long answers would be enough). No credit may be given unless an appropriate explanation is given. 1) The theorem of the variance decomposition holds even if the conditional mean of y is not linear in x . 2) Zero correlation between two random variables never means that the variables are stochastically independent. 3) If the two random variables Y and X are jointly normally distributed, Pr ( | ) ( | ) oj y x E y x . 4) Under the hypothesis that o R r , the restricted OLS estimator is more efficient that the unrestricted OLS estimator ˆ . Thus, the R 2 computed with must be greater than the R 2 computed with ˆ . (Use 2 1 ( / ) R SSE SST .) 5) If regressors are stochastic, we are not able to show that the OLS estimator ˆ is unbiased.
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