Question Multiple Choice Select the answer that is most appropriate and CIRCLE on the MULTIPLE CHOICE ANSWER SHEET provided on page 10. Answers not shown on Multi

03 Jun Question Multiple Choice Select the answer that is most appropriate and CIRCLE on the MULTIPLE CHOICE ANSWER SHEET provided on page 10. Answers not shown on Multi

Question
Multiple Choice

Select the answer that is most appropriate and CIRCLE on the MULTIPLE CHOICE
ANSWER SHEET provided on page 10. Answers not shown on Multiple Choice Answer
Sheet, will not be marked.

ECON271 students: answer 10 parts (from 1 to 10), each part carries 3 marks.

ECON371 students: answer 15 parts (from 1 to 15), each part carries 2 marks.

1.

Which of the following is NOT an assumption of the Simple Linear Regression Model?
a)
b)

The variance of the random error e is var(e)= 2

c)

The covariance between any pair of random errors ei and ej is zero

d)
2.

The value of y, for each value of x, is y = 1 + 2x + e

The parameter estimate of 1 is unbiased.

In the OLS model, what happens to var(b1) as the sample size (N) increases?
a)
b)

it decreases

c)

it does not change

d)
3.

it also increases

cannot be determined without more information

For which alternative hypothesis do you reject H0 if |t| t (/2,N-2)?
a)
b)

k c

c)

k > c

d)
4.

k = c

k < c

In which case would testing the null hypothesis involve a two-tailed statistical test?
a)

H1: Incentive pay for teachers does affect student achievement

b)

H1: Higher sales tax rates does not reduce state tax revenues

c)

H1: Extending the duration of unemployment benefits does not increase the length of
joblessness

d)

H1: Smoking does not reduce life expectancy

5. The overall regression F-statistic tests the null hypothesis that
a)

all slope coefficients are zero.

b)

all slope coefficients and the intercept are zero.

c)

the intercept in the regression and at least one, but not all, of the slope coefficients is
zero.

d)

the slope coefficient of the variable of interest is zero, but that the other slope
coefficients are not.

6.

When should a researcher consider transforming the explanatory variable in a simple linear
regression model?
a)
b)

to get a coefficient estimate with the sign predicted by economic theory

c)

to reduce the variation in the explanatory variable