Econometrics Final Exam ACTUAL
QUESTIONS AND CORRECT ANSWERS
Mark all the assumptions that we need in a regression in order to obtain BLUE OLS estimators -
Correct answers✔✔M1.) Linear in parameters
M2.) Random sampling
M3.) No perfect collinearity
M4.) Zero conditional mean of error term
M5.) Homoskedasticity
Suppose the following variable x2 has been omitted from the following regression equation,
y=B0+B1x1+B2x2+u, B~1 is the estimator obtained when x2 is omitted from the equation. The
bias in B~1 is positive if: - Correct answers✔✔B2>0 and x1 and x2 are positively correlated
High (but not perfect) correlation between 2 or more independent variables is called - Correct
answers✔✔multicollinearity
Which of the following statements is true? - Correct answers✔✔The F statistic is always
nonnegative as SSRr is never smaller than SSRur
In the following equation, gdp refers to gross domestic product and FDI refers to foreign direct
investment, log(gdp)=2.65+.527log(bank credit)+ .122 FDI - Correct answers✔✔If FDI
increases by 1%, gdp increases by approximately 14.7%, the amount of bank credit remaining
constant
The square root of the quantity Var(Bj) = summation of Yiju^2/SSRj^2 is called the
_________________________ for Bj - Correct answers✔✔heteroskedasticity-robust standard
error
, What will you conclude about a regression model if the Breusch-Pagan test results in a small p-
value? - Correct answers✔✔The model contains heteroskedasticity
The linear probability model contains heteroskedasticity unless - Correct answers✔✔all the
slope parameters are zero
Consider the following model, which satisfies the first 4 Guass-Markov assumptions... suppose
x2 is omitted from the regression, which is correct? - Correct answers✔✔plimB1 = B1 + B2d1
Suppose the population regression model shows the relationship between the explanatory
variables x1 and x2 and the dependent variable y
log(y)=B0 + B1x1 + B2x2 + m
log(y) = 5.1 + 2.6x1 + .7x2 - Correct answers✔✔From the coefficient estimate of B2, holding x1
constant when x2 increases by 1 unit, y rises by 70% which is only an approximation that
becomes more inaccurate at the change in log(y) increases
Suppose the dependent variable y depends on a single, strictly nonnegative factor x, as well as
the quadratic factor x^2. Suppose the estimated regression equation is: y=B0 + B1x + B2x^2
The estimated change in y for a given change in x, specifically change of x is given by - Correct
answers✔✔(B1 + 2B2x) change of x
Econometrics is the branch of economics that - Correct answers✔✔develops and uses statistical
methods for estimating economic relationship
The parameters of an econometric model - Correct answers✔✔describe the strength of the
relationship between the variable under study and the factors affecting it
QUESTIONS AND CORRECT ANSWERS
Mark all the assumptions that we need in a regression in order to obtain BLUE OLS estimators -
Correct answers✔✔M1.) Linear in parameters
M2.) Random sampling
M3.) No perfect collinearity
M4.) Zero conditional mean of error term
M5.) Homoskedasticity
Suppose the following variable x2 has been omitted from the following regression equation,
y=B0+B1x1+B2x2+u, B~1 is the estimator obtained when x2 is omitted from the equation. The
bias in B~1 is positive if: - Correct answers✔✔B2>0 and x1 and x2 are positively correlated
High (but not perfect) correlation between 2 or more independent variables is called - Correct
answers✔✔multicollinearity
Which of the following statements is true? - Correct answers✔✔The F statistic is always
nonnegative as SSRr is never smaller than SSRur
In the following equation, gdp refers to gross domestic product and FDI refers to foreign direct
investment, log(gdp)=2.65+.527log(bank credit)+ .122 FDI - Correct answers✔✔If FDI
increases by 1%, gdp increases by approximately 14.7%, the amount of bank credit remaining
constant
The square root of the quantity Var(Bj) = summation of Yiju^2/SSRj^2 is called the
_________________________ for Bj - Correct answers✔✔heteroskedasticity-robust standard
error
, What will you conclude about a regression model if the Breusch-Pagan test results in a small p-
value? - Correct answers✔✔The model contains heteroskedasticity
The linear probability model contains heteroskedasticity unless - Correct answers✔✔all the
slope parameters are zero
Consider the following model, which satisfies the first 4 Guass-Markov assumptions... suppose
x2 is omitted from the regression, which is correct? - Correct answers✔✔plimB1 = B1 + B2d1
Suppose the population regression model shows the relationship between the explanatory
variables x1 and x2 and the dependent variable y
log(y)=B0 + B1x1 + B2x2 + m
log(y) = 5.1 + 2.6x1 + .7x2 - Correct answers✔✔From the coefficient estimate of B2, holding x1
constant when x2 increases by 1 unit, y rises by 70% which is only an approximation that
becomes more inaccurate at the change in log(y) increases
Suppose the dependent variable y depends on a single, strictly nonnegative factor x, as well as
the quadratic factor x^2. Suppose the estimated regression equation is: y=B0 + B1x + B2x^2
The estimated change in y for a given change in x, specifically change of x is given by - Correct
answers✔✔(B1 + 2B2x) change of x
Econometrics is the branch of economics that - Correct answers✔✔develops and uses statistical
methods for estimating economic relationship
The parameters of an econometric model - Correct answers✔✔describe the strength of the
relationship between the variable under study and the factors affecting it
