Practice_Questions_Chapter6

4 18 running auxillary regressions where each

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Unformatted text preview: 911 21.79 Which model appears to be correctly specified? a.)A b.)B c.)C d.)D Ans: C Section: 6.3 14. If you reject the null hypothesis when performing a RESET test, what should you conclude? a.) at least one of the original coefficients is not equal to zero b.) the original model is incorrectly specified and can be improved upon c.) relevant variable are omitted and the coefficient estimates of included variables are biased d.) an incorrect functional form was used Ans: b (the misspecification does not have to be an omitted variable) Section: 6.3 15. When collinear variables are included in an econometric model coefficient estimates are a.) biased downward and have smaller standard errors b.) biased upward and have larger standard errors c.) b...
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