midterm formulae

Question 1

Independent variable is endogenous if

Answer 1

Correlated with the error term

Question 2

-

Answer 2

Average

Answer 3

Predicted

Question 4

B1^

Answer 4

Sum (x1-x-)(y1-y-) / sum (x1 - x-)^2

Question 5

B0^

Answer 5

Y- - B1^x-

Question 6

Ssr

Answer 6

Sum u1- squared

Question 7

SST

Answer 7

Sum (y1 minus yhat)squared

Question 8

R squared

Answer 8

Variation in y explained by the variables in this model
1 - ssr/sst

Question 10

Mpc ^

Answer 10

Slope

Question 11

Apc^

Answer 11

Cons^ / income

B0/income. + b1

Question 12

B1log(sale)
B1 means

Answer 12

Elasticity of y with respect to sales

A 1% increase in sales increase y by b1

Question 13

Y

Answer 13

Dependent variable

Question 14

X

Answer 14

Independent variable

Question 15

U

Answer 15

Error term / unobserved factors

Question 16

B0

Answer 16

Intercept value of y when x = 0

Question 17

B1

Answer 17

Slope / effect of x on y

Y will (+-) by b1 for every x

Question 18

N

Answer 18

Sample size

Question 19

Omitted variable

Answer 19

Variable the omitting of would cause a negative bias

Question 20

For wrong sign

Answer 20

Need a positive variable with negative correlation
Or
Need a negative variable with positive correlation

Question 21

Diff in y

Answer 21

B1(triangle) + b2(triangle)

Triangles = difference veteran ppl A and B

Question 23

Log log

Answer 23

Log y = b1 log x

B1 is percentage change in y when x changes by 1%

Question 24

Level log

Answer 24

B1log x

B1/100 is change in y per percentage change in x

Question 25

Log level

Answer 25

Log y B1 is percentage change in y when x changes by 1 unit

Question 27

Billionare = 0.195log (Pop)

Answer 27

A 1% Increase in pop means 0.195 increase in billionaires

Question 28

Change in siblings

Answer 28

1=0.94changesibs

Question 29

Residuals u1^

Answer 29

Y1 - y1^ Diff between actual and predicted values

Question 31

Ols

Answer 31

Estimates the relationship between variables while minimising residual errors.

Question 32

E(points|attempts) = b0 + b1attempts

Answer 32

The average of points in the population lies on the straight line described by b0 + b1atttwmpts.

Question 33

Mean

Answer 33

Average

Question 34

Omitting variables (x2, x3)

Answer 34

Causes bias in the estimation of b1

Question 35

The bias depends on

Answer 35

The correlation between x1 and the omitted variables The size of the coefficients b1 (large partial efffects mean larger bias)

Question 36

If x1 is highly correlated with x2, omitting them leads to

Answer 36

A significant change in the estimates coefficient of x1.

Question 37

B1(squiggly line) from simple regressions and b1^ can be

Answer 37

Very different due to the omitted variable bias

Question 38

The more correlates x1 is with x2 and x3,

Answer 38

The larger the effects fo x2 and x3 on y are, the greater difference between b1 squiggle and b1^

Question 39

B1 squaggle

Answer 39

B1^ + b2^music note 1 squiggle