Economics 4818 - Spring 2008
Midterm 2 - Answers
Every question is worth 5 points.
For problems 2,3 and 4, make sure to show all your work (test statistic, critical value,
rejection rule, etc.)!
1. Answer trhe following questions:
A) What is consistency?
The regression of Y on X is
where a is the intercept, b is the slope, and ei is the prediction error. Consider the effect
of changing the units of measurement for X and Y. Multiply X by the constant r and Y by
the constant s. The regression of sY on r
Figure 9.2 represents the disturbances generated by equation (9.10) from the shocks of figure 9.1
when D=.9. Figure 9.4 creates disturbances from the shocks of figure 9.1 using equation (9.10)
with D=.6. Figure 9.5 creates disturbances from the shocks
, the ratio first discussed in section 5.2,
as an estimator of in equation (5.1).
Is this estimator unbiased for ? Why or why not?
This estimator is unbiased for because is its expected value. Equation (5.34)
Equation (5.13) gives
University of Colorado
Department of Economics
Prof. Jeffrey S. Zax
Solutions: Midterm Examination
25 July 2014
Don't panic. Think before you write.
This examination requires ninety minutes. Ninety points are possible. The examination ident
11.11 Consider the omission of more than one explanatory variable. Imagine that the
population relationship is
where i has all of the properties of chapter 5.
What is E(yi)?
Its expected value is
By virtue of equation (5.13),
The quantities, , 1x1i, 2x