Midterm 2

Question 1

If xi and yi are positively correlated in the sample then the estimated slope in the regression line is_____?

Answer 1

greater than zero

Question 1

True or false. In a sample linear regression model, wage = B0 + B1male + u, where male is a binary variable (1 if a person is male, and 0 otherwise), B1 is the difference in the average wage between males and non-males.

Answer 1

true

Question 2

True or false. The sample covariance between the regressors and the Ordinary Least Square (OLS) residuals is always positive.

Answer 2

false

Question 3

Consider a simple linear regression model, Y = B0 + B1X + U, what does the E(U|X) = 0 assumption imply?

Answer 3

the expected value of the error term, U, is zero, regardless of what the value of the explanatory variable, X, is

Question 4

In a regression equation, changing the units of measurement of only the independent variable does not affect the ______.

Answer 4

intercept

Question 5

In the equation Y = B0 + X + U, B0 is the _______.

Answer 5

intercept parameter

Question 6

True or false. The sample covariance between the regressors and the Ordinary Least Square (OLS) residuals is always positive.

Answer 6

false

Question 7

What does the equation ybar = B0bar + B1barX denote if the regression equation is y = B0 + B1X1 + U?

Answer 7

the prediction of y given x

Question 8

True or false. In the population linear regression of Y on X, the slope parameter is the ratio between covariance between Y and X and the variance of X.

Answer 8

true

Question 9

What are other names for the Y variable? (5 names)

Answer 9

dependent
explained
response
predicted
regressand

Question 10

What are other names for the X variable? (5 names)

Answer 10

independent
explanatory
control
predictor
regressor

Question 11

What are other names for U variable? (4 names)

Answer 11

error
noise
unexplained
disturbance