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Unformatted text preview: ECONOMETRICS Econ 322 (01:220:322, Section 4) Department of Economics, Rutgers University Fall 2011 Practice Problems (based on appendix A, appendix B and chapter 2 of the textbook i.e. Simple Linear Regression Model) Question1 The accompanying table shows the joint distribution between the change of the unemployment rate (denoted as u) in an election year and the share of the candidate of the incumbent party since 1928. You think of this data as a population which you want to describe, rather than a sample from which you want to infer behavior of a larger population. Joint Distribution of Unemployment Rate Change and Incumbent Party’s Vote Share in Total Vote Cast for the Two MajorParty Candidates, 19282000 50% Incumbent ( Y ) 50% Incumbent ( 1 Y ) Total u ( X ) 0.053 0.211 u ( 1 X ) 0.579 0.157 Total (a) Compute and interpret ( ) E Y and ( ) E X . (b) Calculate and interpret (  1) E Y X and (  0) E Y X . (c) What is the probability that the unemployment rate decreases in an election year? (d) Conditional on the unemployment rate decreasing, what is the probability that an incumbent will lose the election? (e) Are the two random variables independent? Question 2: Let X be a random variable, distributed as Normal(5,4). Find the probabilities of the following events: (a) (¡ ¢ £) (b) (¡ ¤ ¥) (c)...
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 Spring '07
 Francisco
 Econometrics, Regression Analysis, Variance, Probability theory

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