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Unformatted text preview: Midterm 2  Form C  Spring 2010 Economics 203 Instructors: Petry and Sahakyan Name: 1. E. A positive residual is more likely to follow a positive residual when positive autocorrelation is present. Similarly, a negative residual is more likely to follow a negative residual when positive autocorrelation is present. In contrast, negative autocorrelation is characterized by adjacent residuals being likely to be of opposite signs. 2. D. R 2 can never decrease when adding independent variables. Adjusted R 2 R 2 and R 2 is always between zero and one. R 2 is not penalized by adding independent variables. The value of adjusted R 2 you are never sure about when adding variables. 3. A. R 2 of 0 means your SSR is 0 (with SST =50,000). That means your Fstatistic is 0, since it has SSR on top and something positive on bottom. 4. C. Pvalues on the individual ttests increase under serious multicollinearity, not decrease. This is due to inflated standard errors of the slope coefficients. 5. E. The pvalues for estimated coefficients are always twotailed ( 6 =). The pvalue of 0.000402 is for the estimated coefficient b 1 yet hypotheses are always on the population parameters, thus 1 . 6. C. The test implied by the Excel output is the twosided test. To get the pvalue for the onesided test, we halve the pvalue from the twosided test. 7. A. The predicted sales is SALES = 8 . 7+5(4 . 2) = 29 . 7. The appropriate critical value is t . 025 , 8 = 2 . 31. This gives everything that we need to put into the confidence interval formula: SALES t / 2 s s 1 /n + ( x g x ) 2 ( n 1) s 2 x = 29 . 7 (2 . 31)(3 . 234578798) s 1 / 10 + (5 5) 2 (10 1)2 . 22 = 29 . 7 (2 . 31)(3 . 234578798) p 1 / 10 = (27 . 337 , 32 . 063) 8. D. Under simple regression the overall F test statistic equals the (ttest stat) 2 , thus q 81700 . 4 792 . 05 and attach sign of estimated coefficient of b 1 so 10.156. You also have s x = 8 . 7458, so you could calculate s b 1 from that and do the standard ttest statistic formula of b 1 /s b 1 ....
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This note was uploaded on 02/14/2011 for the course ECON 203 taught by Professor Petry during the Spring '09 term at University of Illinois, Urbana Champaign.
 Spring '09
 PETRY
 Economics

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