ECS3706 typical exam qs and ans

Typical Exam Questions by Chapters Chapter 1 I) Stochastic error term (ε) is the true but unobserved error term in a regression equation. Alt. ans. It is a term added to a regression equation to introduce all the variation in dependent variable (Y) that cannot be explained by the included independent variables (Xs). II) Regression analysis is a statistical technique used to estimate the coefficients on the regression equation from a data set. Alt. ans. A regression analysis is a statistical technique that attempts to explain movements in one variable (dependent variable Y) as a function of movements in independent variables (Xs). III) Expected value of a parameter is the mean/average of that particular parameter Choose any 2 of these: Structural Analysis: it entails the quantification of economic relationships between variables. Policy Evaluation: Econometrics is used to quantify and model policy instruments. The quantitative outcomes are presented so that government can choose the most appropriate policy. Forecasting: entails a forward simulation of an econometric model. The econometric model is logically consistent, these models are useful in the medium to long terms when structural relationships are more dominant than short term/ random effects