ECONOMETRICS

Question 1

It deals with predicting the likelihood of future events. It is primarily a theoretical branch of mathematics, which studies the consequences of mathematical definitions.

Answer 1

Probability

Question 2

It involves the analysis of the frequency of past events. It is primarily an applied branch of mathematics, which tries to make sense of observations in the real world.

Answer 2

Statistics

Question 3

Axioms of Probability

Answer 3

P(a) ≥ 0
Sample Space P(S) = 1
If disjoint, P(A1UA2UA3) = P(A1) + P(A2) + P(A3)…

Question 4

Is the probability that the event will occur given the knowledge that an event A has already occurred. This probability is written P(B|A), notation for the probability of B given A.

Answer 4

Conditional Probability

Question 5

It states that when there are n ways to do one thing, and m ways to do another thing, then the number of ways to do both the things can be obtained by taking their product. This is expressed as n×m.

Answer 5

Principles of Counting

Question 6

A set of items in which both composition and order are important.

Answer 6

Permutation

Question 7

Often the order of selection is not important and interest centers only on the selected r objects. That is we are interested in the number of subsets of size r that can be selected from a set of n different objects.

Answer 7

Combination

Question 8

This method is appropriate when choices must be made from two or more distinct groups. If there are m possible selections in one group and n possible selections in a second group, the total number of arrangements is m x n.

Answer 8

Multiplication Method

Question 9

T OR F: Economics is an exact science.

Answer 9

False (Social Science)

Question 10

T OR F: The Law of Demand states that price and quantity demanded are inversely related.

Answer 10

True

Question 11

T OR F: The methodology of econometrics starts with the analysis of economic theories.

Answer 11

True

Question 12

T OR F: In inferential statistics we make inferences on economic theories using the complete set of data or population. .

Answer 12

False

Question 13

T OR F: Independent variable is also termed as predictor variable

Answer 13

True

Question 14

Econometrics means _________.

Answer 14

Economic Measurement

Question 15

It consists of the application of mathematical statistics to economic data to lend empirical support to the models constructed by mathematical economics and to obtain numerical results.

Answer 15

Econometrics

Question 16

Methodology of Econometrics

Answer 16

1. Statement of Theory/Hypothesis
2. Specification of Mathematical Model of the Theory
3. Specification of the Econometric Model of Consumption
4. Obtaining Data
5. Estimation of the Econometric Model
6. Hypothesis Testing
7. Forecasting or Prediction
8. Use of the Model for Control or Policy Purposes

Question 17

Types of Econometrics

Answer 17

Theoretical Econometrics and Applied Econometrics

Question 18

Is concerned with the development of appropriate methods for measuring economic relationships specified by the economic models. In this aspect, econometrics leans heavily on mathematical statistics.

Answer 18

Theoretical Econometrics

Question 19

It uses the tools of theoretical econometrics to study some special fields of economics and business, such as the production function, investment function, demand and supply functions, portfolio theory, etc.

Answer 19

Applied Econometrics

Question 20

The bread-and-butter tool of econometrics.

Answer 20

Regression Analysis

Question 21

The term regression analysis was originally used in 1885 by ____________ in his analysis of the relationship between the heights of children and parents. He formulated the “law of universal regression”, which specifies that “each peculiarity in a man is shared by his kinsmen, but on average or less degree.”

Answer 21

Sir Francis Galton

Question 22

This essentially deal with random or stochastic variables, that is, variables that have probability distribution.

Answer 22

Statistical relationship among variable

Question 23

This deal with variables, but these are not random or stochastic.

Answer 23

Deterministic Dependency

Question 24

Its primary objective is to measure the strength or degree of linear relationship between two variables. .

Answer 24

Correlation analysis

Question 25

It measures the strength of (linear) association

Answer 25

Correlation Coefficient

Question 26

Is a set of observations on the values that a variable takes at different times. Such data maybe collected at regular time intervals, such as daily (e.g. stock prices, weather reports), weekly (money supply figures), monthly (unemployment rate, the Consumer Price Index CPI), quarterly (GDP), annually (government budgets) quinquennially, that is, every 5 years (e.g. census of manufactures) or decennially (the census of population)

Answer 26

Time series data

Question 27

a time series is _________ if its mean and variance do not vary systematically overtime.

Answer 27

Stationary

Question 28

Are data on one or more variables collected at the same point in time, such as the census on population and housing conducted by the Philippine Statistics Authority.

Answer 28

Cross-section data

Question 29

Are elements of both time series and cross-section data.

Answer 29

Pooled data

Question 30

It is the highest level of measurement.

Answer 30

Ratio scale

Question 31

It satisfies the last two properties of the ratio scale variable but not the first. Thus, the distance between two time periods, say (2020-1994) is meaningful but not the ratio of two time periods (2020/1994).

Answer 31

Interval Scale

Question 32

A variable belongs to this category only if it satisfies the third property of the ratio scale (natural ordering). Examples are grading systems (A, B, C grades) or income class (upper, middle, lower). For these variables the ordering exists but the distance between the categories cannot be quantified.

Answer 32

Ordinal Scale

Question 33

Variables in this category have none of the feature of the ratio scale variables. Variables such as gender, and marital status simply denote categories. Nominal level of measurement are observation of qualitative variable that can be classified and counted.

Answer 33

Nominal Scale

Question 34

Another term for dependent variable.

Answer 34

Regressand

Question 35

Another term for independent variable.

Answer 35

Explanatory variable or regressor

Question 36

Is a counting technique in which order makes a difference. It is distinguished from both a permutation and a combination by the fact that duplication is allowed. In the case of this counting technique, the same element can be used more than once.

Answer 36

Multiple Choice Arrangement