Econometric - Lecture 4

____ is the constant or intercept term; it indicates the value of Y when x equals 0

• β₀

• β₁

• ε

• X_i

An equation is linear if ...

• plotting the function in terms of X and Y generates a curve

• plotting the function in terms of X and Y generates a straight line

• plotting the function in terms of X and Y generates a relationship between X and Y

• plotting the function in terms of X and Y generates a slope

The symbol for error term

• α

• β

• ε

• y

The inclusion of an irrelevant variable will:

• Increase the variance

• decrease adjusted r-squared

• decrease the t-statistic value

• all above is correct

You are estimating 400 subsamples of a random variable x which is uniformly distributed between 3 and 5. What could you tell about the sampling distribution of the mean?

• 
  It is impossible to predict.

• 
  It will be uniformly distributed with mean 4.

• 
  It will be chi-squared distributed with mean 3.

• 
  

  It will be normally distributed with mean 4.

After estimation you got y = 2.5 + 3.5*x, st.error of beta1 is 1, number of obs. is 421. Would you reject the null hypothesis of beta1 = 0.5 in favor of the alternative of not equal at 5% level?

• 
  Yes, as 3 is greater than roughly 2.

• 
  No, as 3 is greater than roughly 2.

• 
  Yes, as 3.5 is greater than roughly 2.

• 
  No, as 3.5 is greater than roughly 2.