econ2p91_ReviewQuestionsMultipleChoice_Chapters4_5

# econ2p91_ReviewQuestionsMultipleChoice_Chapters4_5 - Review...

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Review Questions: Chapters 4 and 5 Linear Regression with One Regressor 1) The regression 2 R is defined as follows: a. ESS TSS b. RSS TSS c. 1 2 2 1 1 ( )( ) ( ) ( ) n i i i n n i i i i Y Y X X Y Y X X = = = - - - - d. 2 SSR n - 2) Which of the following statements is correct? a. TSS = ESS + SSR b. ESS = SSR + TSS c. ESS > TSS d. R 2 = 1 – ( ESS / TSS ) 3) 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. 4) 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. 5) 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. 1

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6) Interpreting the intercept in a sample regression function is a. not reasonable because you never observe values of the explanatory variables around the origin. b. reasonable because under certain conditions the estimator is BLUE. c. reasonable if your sample contains values of X i around the origin. d. not reasonable because economists are interested in the effect of a change in X on the change in Y . 7) The sample average of the OLS residuals is a. some positive number since OLS uses squares. b. zero. c. unobservable since the population regression function is unknown. d. dependent on whether the explanatory variable is mostly positive or negative. 8) The regression
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econ2p91_ReviewQuestionsMultipleChoice_Chapters4_5 - Review...

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