Question 1

You can conduct a positive sign test on a negative coefficient, but the results will be the same every time: Do not reject Ho.

Accepted Answer

A) True 
 B)False  True

Question 2

The constant term is biased in a regression missing an important explanatory variable.

Accepted Answer

A) True 
 B)False  True

Question 3

A) Criticize stepwise regression
B) What criteria are important for determining if a particular explanatory variable belongs in a regression. (4pts.)

Accepted Answer

A) It ignores theory.
Perhaps the pool stinks.
Includes or excludes variables based on biased statistics.
Ignores Ramsey's reset test, Akaike, Schwarz, Hannan-Quinn
B) Theory, significance, measures of goodness-of-fit, altered estimators, Ramsey's reset test.

Question 4

If a regression is underspecified, then the estimators will not average out to equal the
true values of the structural parameters in repeated sampling.

Accepted Answer

A) True 
 B)False

Question 5

The Schwarz Criterion is monotonically decreasing with respect to the number of explanatory variables.

Accepted Answer

A) True 
 B)False

Question 6

If a test of significance results in "Do not reject Ho", then there is absolutely no chance that a TYPE II error has been committed

Accepted Answer

A) True 
 B)False

Question 7

A 95% confidence interval for a given coefficient can never be larger than a 90% confidence interval.

Accepted Answer

A) True 
 B)False

Question 8

If a regression is over specified then the estimators should change markedly once the extraneous variables are removed.

Accepted Answer

A) True 
 B)False

Question 9

Raising the critical level of a test from 5% to 10% decreases the probability that the test will result in a TYPE II error.

Accepted Answer

A) True 
 B)False

Question 10

Dependent Variable: WHY Method: Least Squares Sample(adjusted): 19652006 Included observations: 30 atter adjusting endpoints $\begin{array}{lllll} \hline \text { Variable } & \text { Coefficient } & \text { Std. Error } & \text { t-Statistic } & \text { Prob. } \ \hline \hline \text { C } & -19.60486 & 123.5064 & -0.158736 & 0.8747 \ \text { EX1 } & 20.04112 & 12.56987 & 1.594377 & 0.1189 \ \text { EX2 } & 0.517140 & 0.007738 & 66.83540 & 0.0000 \ \hline \text { R-squared } & 0.991948 &\text { Mean dependent var } && 2775.633 \ \text { Adjusted R-squared } & 0.991536 & \text { S.D. dependent var } && 1915.813 \ \text { S.E. of regression } & 176.2591 & \text { Akaike info criterion }&& 13.25054 \ \text { Sum squared resid } & 1211624 . & \text { Schwarz criterion } && 13.37466 \ \text { Log likelihood } & -275.2613 & \text { F-statistic }&& 2402.403 \ \text { Durbin-Watson stat } & 0.289425 &\text { Prob(F-statistic) } && 0.000000 \end{array}$ Use the Eviews output above to help with A) through I) below. A) Interpret the coefficient on EX1. B) Interpret R² for this regression. C) Replace the "?"'s with the appropriate values. An 80% confidence interval around the coefficient on EX1 is: 20.04112 +/- (?)(?) D) Perform a positive sign test on the coefficient attached to EX2. Show the 5-step procedure. E) IF you performed a test of significance on the constant term at the 87 percent critical level, would you reject the null hypothesis or not? Explain. F) Perform a test to determine if the coefficient attached to EX2 is greater than 7.47. Show the 5-step procedure. G) Based on the information in the table above (and ignoring Ramsey's Reset test which we will perform in a moment) do you think the regression above is under or over specified? Explain. H)1.Perform Ramsey's Reset Test on the regression above using the Eviews printout below. Show the 5-step procedure. 2. What is the difference between "FITTED^2" and "FITTED^3" in the Eviews printout above? Do the two terms appear in the restricted or unrestricted regression?

Accepted Answer

The answer of Dependent Variable: WHY
Method: Least Squares
Sample(adjusted): 19652006
Included observations:...

Question 11

The standard error of the regression (SER) is monotonically decreasing with respect to the number of explanatory variables.

Accepted Answer

A) True 
 B)False

Question 12

If the prob-value is less than .05, then the hypothesis test will reject Ho at the 5% critical level.

Accepted Answer

A) True 
 B)False

Exam 2: Simple Regression Analysis

You can conduct a positive sign test on a negative coefficient, but the results will be the same every time: Do not reject Ho.

The constant term is biased in a regression missing an important explanatory variable.

A) Criticize stepwise regression B) What criteria are important for determining if a particular explanatory variable belongs in a regression. (4pts.)

If a regression is underspecified, then the estimators will not average out to equal the true values of the structural parameters in repeated sampling.

The Schwarz Criterion is monotonically decreasing with respect to the number of explanatory variables.

If a test of significance results in "Do not reject Ho", then there is absolutely no chance that a TYPE II error has been committed

A 95% confidence interval for a given coefficient can never be larger than a 90% confidence interval.

If a regression is over specified then the estimators should change markedly once the extraneous variables are removed.

Raising the critical level of a test from 5% to 10% decreases the probability that the test will result in a TYPE II error.

The standard error of the regression (SER) is monotonically decreasing with respect to the number of explanatory variables.

If the prob-value is less than .05, then the hypothesis test will reject Ho at the 5% critical level.