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Unformatted text preview: 01:220:322:07 Econometrics Fall 2010 Midterm2 November 4. Instructor: Yoichi Otsubo Student ID Name Instructions. Starting at 4:30 pm &nishing at 5:50 pm. You can use a SIMPLE calculator but cell phone is NOT allowed. There are 20 questions, 5 points each. In total, worth 100 points of the course grade. A. Multiple Choice. Circle the right answer. 1) E ( u i j X i ) = 0 says that a. dividing the error by the explanatory variable results in a zero (on average). b. large outliers are unlikely. c. the sample mean of the X s is much larger than the sample mean of the errors. *d. the conditional distribution of the error given the explanatory variable has a zero mean. 2) The error term is homoskedastic if *a. var ( u i j X i = x ) is constant for i = 1 ;:::;n b. var ( u i j X i = x ) depends on x c. X i is normally distributed d. there are no outliers 3) In the presence of heteroskedasticity, and assuming that the usual least squares assumptions hold, the OLS estimator is a. e cient b. BLUE *c. unbiased and consistent d. unbiased but not consistent 4) In the multiple regression model, the adjusted R 2 ; a. cannot be negative. *b. will never be greater than the R 2 . c. equals the square of the correlation coe cient r: d. cannot decrease when an additional explanatory variable is added. 1 5) Consider the following multiple regression models (a) to (d) below. DFemme = 1 if the individual is a female, and is zero otherwise; DMale is a binary variable which takes on the value one if the individual is male, and is zero otherwise; DMarried is a binary variable which is unity for married individuals and is zero otherwise, and DSingle is (1 & DMarried ) . Regressing weekly earnings ( Earn ) on a set of explanatory variables, you will experience perfect multicollinearity in the following cases unless: a. d Earn i = b & + b & 1 DFemme + b & 2 DMale + b & 3 X 3 i : b. d Earn i = b & + b & 1 DMarried + b & 2 DSingle + b & 3 X 3 i : *c. d Earn i = b & + b & 1 DFemme + b & 3 X 3 i : d. d Earn i = b & 1 DFemme + b & 2 DMale + b & 3 DMarried + b & 4 DSingle + b & 5 X 3 i : 6) Under imperfect multicollinearity a. the OLS estimator cannot be computed....
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This note was uploaded on 11/20/2011 for the course ECONOMICS 220:322 taught by Professor Otusbo during the Fall '10 term at Rutgers.
 Fall '10
 Otusbo
 Econometrics

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