Econ 371
Problem Set #1
Answer Key
1. You are given the following information regarding the joint distribution of X (the age of a
person) and Y (the number of days they choose to spend at Saylorville Lake).
Values of X
20
40
60
0
0.25
0.15
0.25
Values
1
0
Econ 371
Problem Set #2
Answer Set
1. Let Y be a Bernoulli random variable with success probability P r(Y = 1) = p, and let Y1 , . . . , Yn
be i.i.d. draws from this distribution. Let p be the fraction of successes (1s) in this sample. It
is straightforwa
Econ 371
Problem Set #3
Answer Sheet
4.3 In this question, you are told that a OLS regression analysis of average weekly earnings yields the following
estimated model.
AW E = 696.7 + 9.6 Age, R2 = 0.023, SER = 624.1
(1)
a. The rst question asks you to exp
Econ 371
Problem Set #4
Answer Sheet
6.2 This question asks you to use the results from column (1) in the table on page 213.
a. The rst part of this question asks whether workers with college degrees earn more than workers with
only a high school degree.
Econ 371
Problem Set #5
Answer Sheet
8.1 This question looks at log dierences and how well they approximate percentage changes.
a. The rst question indicates the Sales2001 = 196 million and Sales2002 = 198 million. You are asked to
compare the percentage
Econ 371
Problem Set #6
Answer Sheet
10.1 In this rst question, you are asked to consider the following equation:
Yit = 0 + 1 Xit + 3 St + uit .
(1)
You are asked how you might time-demean the data so as to estimate 1 .
To answer this question, lets start
Econ 371
Problem Set #7
Answers
1. Stock and Watson, question 12.10. You are told that you have an instrumental variable regression model
with Yi = 0 + 1 Xi + 2 Wi + ui , where Zi is an instrument. You are then told that Wi is unavailable, but
you go ahea
Econ 371
Exam #4 - Practice
Multiple Choice (5 points each): For each of the following, select the single most appropriate
option to complete the statement.
1) The following will not cause correlation between X and u in the simple regression model:
a) sim
Econ 371
Exam #1
Multiple Choice (5 points each): For each of the following, select the single most appropriate
option to complete the statement.
1) The probability of an outcome
a)
b)
c)
d)
is the number of times that the outcome occurs in the long run.
Econ 371
Exam #2
Multiple Choice (5 points each): For each of the following, select the single most appropriate
option to complete the statement.
1) The slope estimator, 1, has a smaller standard error, other things equal, if
a) there is more variation in
Econ 371
Practice Exam #3
Multiple Choice (5 points each): For each of the following, select the single most appropriate
option to complete the statement.
1) The interpretation of the slope coefficient in the model ln(Yi ) = 0 + 1 ln( X i ) + ui is as
fol