# 1.) An Overview of Regression Analysis Flashcards

1
Q

β0

A

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

2
Q

β1

A

is the slope coefficient; and it indicates the amount that Y will change when X increases by one unit

3
Q

an equation is linear if …

A

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

4
Q

A stochastic error term is a term that is added to a regression to…

A

introduce all of the variation in Y that cannot be explained by the included X’s

5
Q

Unexplained variation probably comes from…

A

sources such as omitted influences, measurement error, incorrect functional form, or purely random and totally unpredictable occurrences

6
Q

By random the textbook authors mean…

A

something that has its value determined solely by chance.

7
Q

Four possible sources of variation that require stochastic error term

A
1. ) Many minor influences on Y are omitted form the equation
2. ) It is virtually impossible to avoid some sort of measurement error in the dependent variable
3. ) The underlying theoretical equation might have a different functional for (or shape) than the one chosen for the regression.
4. ) Al attempts to generalize human behavior must contain at least some amount of unpredictable or purely random variation.
8
Q

What is the deterministic component of the regression expression?

A

B0 + B1*X

9
Q

What changes from observation to observation?

A

The coefficients do not change from observation to observation, but the values of Y,X, and e do.

10
Q

Multivariate regression coefficients…

A

serve to isolate the impact on Y of a change in one variable from the impact on Y of changes in the other variables

11
Q

The ability of regression analysis to measure the impact of one variable on the dependent variable, holding…

A

constant the influence of the other variables in the equation, is a tremendous advantage.

12
Q

when is a dummy variably useful?

A

when we want to quantify a concept that is inherently qualitative (like gender)

13
Q

The estimated regression coefficients are..

A

empirical best guesses of the true regression coefficients and are obtained from data from a sample of Ys and Xs

14
Q

Estimated coefficients are used..

A

to determine Y hats, the estimated or fitted value of Y

15
Q

“Y hat i “is…

A

the estimated value of an observed Y, and it represents the value of Y calculated form the estimated regression equation for the ith observation.

16
Q

What is the residual?

A

It is the difference between the estimated value of the dependent variable and the actual value of the dependent variable

17
Q

The smaller the residuals…

A

the better the fit, and the closer estimated Ys will be to the observed Ys.

18
Q

The difference between an observed data point and the ture line is the …

A

value of the stochastic error term

19
Q

Cross Sectional Data

A

all of the observations are form the same point in time and represent different individual economic entities from that same point in time