This preview shows pages 1–3. Sign up to view the full content.
Professor Mumford
Econ 360  Fall 2010
[email protected]
Problem Set 2
Due at the beginning of class on Tuesday, September 7
True/False
(20 points) Please write the entire word. No explanations are required.
1. If E (
u

x
) = E (
u
) then we say that
u
is mean independent of
x
.
2. The goodnessofﬁt measure for OLS regressions,
R
Squared, depends on the unit of
measurement of the variables.
3. Under assumption SLR.1  SLR.4, the OLS estimates equal the true population pa
rameters.
4. The average value of the residuals is zero.
5. The zero conditional mean assumption implies that
u
i
= 0 for all
i
regardless of the
value of
x
i
.
1
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
(20 points)
6. In the following estimated regression equation ln (
wage
) = 0
.
584 + 0
.
083
educ
where
educ
is measured in years of education, how does one more year of education aﬀect the
predicted wage?
(a) wage increases by $0.083
(b) wage increases by $8.30
(c) wage increases by 0.083 percent
(d) wage increases by 8.3 percent
7. Which is NOT a correct representation of
R
squared?
(a)
∑
u
2
i
(b)
SSE
SST
(c) 1

SSR
SST
(d) square of the sample correlation between
y
i
and ˆ
y
i
8. When an explanatory variable is correlated with the error term then it is said to be
(a) independent
(b) endogenous
(c) statistically signiﬁcant
(d) observational
9. Which of the following assumptions is NOT one of the four assumptions needed to
show that the OLS estimates are unbiased?
(a) independence
(b) zero conditional mean
(c) linear in parameters
(d) sample variation in the explanatory variable
10. Which of the following population models violates Assumption SLR.1 (Linear in Pa
rameters)?
(a)
This is the end of the preview. Sign up
to
access the rest of the document.
This note was uploaded on 02/06/2012 for the course ECON 360 taught by Professor Na during the Spring '10 term at Purdue University.
 Spring '10
 NA

Click to edit the document details