Economics Practice Test with Verified
Answers 2024/2025
1. An empirical analysis relies on _____to test a theory. - ANS ✔data
2. The term 'u' or 'e' in an econometric model is usually referred to as the
_____. - ANS ✔error term
3. A data set that consists of a sample of individuals, households, firms,
cities, states, countries, or a variety of other units, taken at a given point
in time, is called a(n) _____. - ANS ✔cross-sectional data set
4. A data set that consists of observations on a variable or several variables
over time is called a _____ data set. - ANS ✔time series
5. Which of the following is an example of time series data? - ANS ✔Data on
the gross domestic product of a country over a period of 10 years.
6. A dependent variable is also known as a(n) _____. - ANS ✔response
variable
, 7. If a change in variable x causes a change in variable y, variable x is called
the _____. - ANS ✔explanatory variable
8. In the equation y = β_0 + β_1x + u, β_0 is the _____. - ANS ✔intercept
parameter
9. In the equation y = β_0 + β_1 x + u, y denotes consumption and x denotes
income. What is the residual for the 5th observation if y_5 = $500 and
(y_5 ) =$=
̂ $450? - ANS ✔$50
10.the error term in a regression equation is said to exhibit homoskedasticty
if _____. - ANS ✔. it has the same variance for all values of the explanatory
variable.
11.A natural measure of the association between two random variables is
the correlation coefficient (r). - ANS ✔True
12.Does r fall between 0 and 1 or between -1 and 1? - ANS ✔-1 and 1
Answers 2024/2025
1. An empirical analysis relies on _____to test a theory. - ANS ✔data
2. The term 'u' or 'e' in an econometric model is usually referred to as the
_____. - ANS ✔error term
3. A data set that consists of a sample of individuals, households, firms,
cities, states, countries, or a variety of other units, taken at a given point
in time, is called a(n) _____. - ANS ✔cross-sectional data set
4. A data set that consists of observations on a variable or several variables
over time is called a _____ data set. - ANS ✔time series
5. Which of the following is an example of time series data? - ANS ✔Data on
the gross domestic product of a country over a period of 10 years.
6. A dependent variable is also known as a(n) _____. - ANS ✔response
variable
, 7. If a change in variable x causes a change in variable y, variable x is called
the _____. - ANS ✔explanatory variable
8. In the equation y = β_0 + β_1x + u, β_0 is the _____. - ANS ✔intercept
parameter
9. In the equation y = β_0 + β_1 x + u, y denotes consumption and x denotes
income. What is the residual for the 5th observation if y_5 = $500 and
(y_5 ) =$=
̂ $450? - ANS ✔$50
10.the error term in a regression equation is said to exhibit homoskedasticty
if _____. - ANS ✔. it has the same variance for all values of the explanatory
variable.
11.A natural measure of the association between two random variables is
the correlation coefficient (r). - ANS ✔True
12.Does r fall between 0 and 1 or between -1 and 1? - ANS ✔-1 and 1
