EC295 MIDTERM PRACTICE EXAM
QUESTIONS AND ANSWERS
Analyzing the behavior of unemployment rates across U.S. states in March of 2006 is
an
example of using:
A) time series data.
B) panel data.
C) cross-sectional data.
D) experimental data. - Correct Answers -C) cross-sectional data.
Studying inflation in the United States from 1970 to 2006 is an example of using:
A) randomized controlled experiments.
B) time series data.
C) panel data.
D) cross-sectional data. - Correct Answers -B) time series data.
Analyzing the effect of minimum wage changes on teenage employment across the 48
contiguous U.S. states from 1980 to 2004 is an example of using:
A) time series data.
B) panel data.
C) having a treatment group vs. a control group, since only teenagers receive minimum
wages.
D) cross-sectional data - Correct Answers -B) panel data.
Panel data:
A) is also called longitudinal data.
B) is the same as time series data.
C) studies a group of people at a point in time.
D) typically uses control and treatment group - Correct Answers -A) is also called
longitudinal data.
Econometrics can be defined as follows with the exception of:
A) the science of testing economic theory.
B) fitting mathematical economic models to real-world data.
C) a set of tools used for forecasting future values of economic variables.
D) measuring the height of economists - Correct Answers -D) measuring the height of
economists
To provide quantitative answers to policy questions:
A) it is typically sufficient to use common sense.
,B) you should interview the policy makers involved.
C) you should examine empirical evidence.
D) is typically impossible since policy questions are not quantifiable - Correct Answers -
C) you should examine empirical evidence.
An example of a randomized controlled experiment is when:
A) households receive a tax rebate in one year but not the other.
B) one U.S. state increases minimum wages and an adjacent state does not, and
employment
differences are observed.
C) random variables are controlled for by holding constant other factors.
D) some 5th graders in a specific elementary school are allowed to use computers at
school
while others are not, and their end-of-year performance is compared holding constant
other
factors - Correct Answers -D) some 5th graders in a specific elementary school are
allowed to use computers at school
while others are not, and their end-of-year performance is compared holding constant
other
factors
Ideal randomized controlled experiments in economics are:
A) often performed in practice.
B) often used by the Federal Reserve to study the effects of monetary policy.
C) useful because they give a definition of a causal effect.
D) sometimes used by universities to determine who graduates in four years rather than
five - Correct Answers -C) useful because they give a definition of a causal effect.
Most economic data are obtained:
A) through randomized controlled experiments.
B) by calibration methods.
C) through textbook examples typically involving ten observation points.
D) by observing real-world behavior. - Correct Answers -D) by observing real-world
behavior.
One of the primary advantages of using econometrics over typical results from
economic
theory, is that:
A) it potentially provides you with quantitative answers for a policy problem rather than
simply
suggesting the direction (positive/negative) of the response.
B) teaching you how to use statistical packages
C) learning how to invert a 4 by 4 matrix.
D) all of the above - Correct Answers -A) it potentially provides you with quantitative
answers for a policy problem rather than simply
suggesting the direction (positive/negative) of the response.
, Interpreting the intercept in a sample regression function is:
A)reasonable if your sample contains values of Xi around the origin.
B)reasonable because under certain conditions the estimator is BLUE.
C)not reasonable because economists are interested in the effect of a change in X on
the change in Y.
D)not reasonable because you never observe values of the explanatory variables
around the origin. - Correct Answers -A)reasonable if your sample contains values of Xi
around the origin.
Assume that the relationship between test scores and the student-teacher ratio can be
modeled as a linear function with an intercept of 698.9 and a slope of (-2.28). A
decrease in the student-teacher ratio by 2 will:
A)reduce test scores by 2.56 on average
B)reduce test scores by 2.28 on average
C)reduce test scores by 4.56 for every school district
D)result in a test score of 698.9 - Correct Answers -A)reduce test scores by 2.56 on
average
The sample average of the OLS residuals is:
A)a positive number since OLS uses squares.
B)zero.
C)dependent on whether the explanatory variable is mostly positive or negative.
D)unobservable since the population regression function is unknown. - Correct Answers
-B) Zero
In a randomized controlled experiment:
A) there is a control group and a treatment group.
B) you control for the effect that random numbers are not truly randomly generated
C) you control for random answers
D) the control group receives treatment on even days only - Correct Answers -A) there
is a control group and a treatment group.
The reason why economists do not use experimental data more frequently is for all of
the
following reasons EXCEPT that real-world experiments:
A) cannot be executed in economics.
B) with humans are difficult to administer.
C) are often unethical.
D) have flaws relative to ideal randomized controlled experiments - Correct Answers -A)
cannot be executed in economics.
The most frequently used experimental or observational data in econometrics are of the
following type:
A) cross-sectional data.
B) randomly generated data.
QUESTIONS AND ANSWERS
Analyzing the behavior of unemployment rates across U.S. states in March of 2006 is
an
example of using:
A) time series data.
B) panel data.
C) cross-sectional data.
D) experimental data. - Correct Answers -C) cross-sectional data.
Studying inflation in the United States from 1970 to 2006 is an example of using:
A) randomized controlled experiments.
B) time series data.
C) panel data.
D) cross-sectional data. - Correct Answers -B) time series data.
Analyzing the effect of minimum wage changes on teenage employment across the 48
contiguous U.S. states from 1980 to 2004 is an example of using:
A) time series data.
B) panel data.
C) having a treatment group vs. a control group, since only teenagers receive minimum
wages.
D) cross-sectional data - Correct Answers -B) panel data.
Panel data:
A) is also called longitudinal data.
B) is the same as time series data.
C) studies a group of people at a point in time.
D) typically uses control and treatment group - Correct Answers -A) is also called
longitudinal data.
Econometrics can be defined as follows with the exception of:
A) the science of testing economic theory.
B) fitting mathematical economic models to real-world data.
C) a set of tools used for forecasting future values of economic variables.
D) measuring the height of economists - Correct Answers -D) measuring the height of
economists
To provide quantitative answers to policy questions:
A) it is typically sufficient to use common sense.
,B) you should interview the policy makers involved.
C) you should examine empirical evidence.
D) is typically impossible since policy questions are not quantifiable - Correct Answers -
C) you should examine empirical evidence.
An example of a randomized controlled experiment is when:
A) households receive a tax rebate in one year but not the other.
B) one U.S. state increases minimum wages and an adjacent state does not, and
employment
differences are observed.
C) random variables are controlled for by holding constant other factors.
D) some 5th graders in a specific elementary school are allowed to use computers at
school
while others are not, and their end-of-year performance is compared holding constant
other
factors - Correct Answers -D) some 5th graders in a specific elementary school are
allowed to use computers at school
while others are not, and their end-of-year performance is compared holding constant
other
factors
Ideal randomized controlled experiments in economics are:
A) often performed in practice.
B) often used by the Federal Reserve to study the effects of monetary policy.
C) useful because they give a definition of a causal effect.
D) sometimes used by universities to determine who graduates in four years rather than
five - Correct Answers -C) useful because they give a definition of a causal effect.
Most economic data are obtained:
A) through randomized controlled experiments.
B) by calibration methods.
C) through textbook examples typically involving ten observation points.
D) by observing real-world behavior. - Correct Answers -D) by observing real-world
behavior.
One of the primary advantages of using econometrics over typical results from
economic
theory, is that:
A) it potentially provides you with quantitative answers for a policy problem rather than
simply
suggesting the direction (positive/negative) of the response.
B) teaching you how to use statistical packages
C) learning how to invert a 4 by 4 matrix.
D) all of the above - Correct Answers -A) it potentially provides you with quantitative
answers for a policy problem rather than simply
suggesting the direction (positive/negative) of the response.
, Interpreting the intercept in a sample regression function is:
A)reasonable if your sample contains values of Xi around the origin.
B)reasonable because under certain conditions the estimator is BLUE.
C)not reasonable because economists are interested in the effect of a change in X on
the change in Y.
D)not reasonable because you never observe values of the explanatory variables
around the origin. - Correct Answers -A)reasonable if your sample contains values of Xi
around the origin.
Assume that the relationship between test scores and the student-teacher ratio can be
modeled as a linear function with an intercept of 698.9 and a slope of (-2.28). A
decrease in the student-teacher ratio by 2 will:
A)reduce test scores by 2.56 on average
B)reduce test scores by 2.28 on average
C)reduce test scores by 4.56 for every school district
D)result in a test score of 698.9 - Correct Answers -A)reduce test scores by 2.56 on
average
The sample average of the OLS residuals is:
A)a positive number since OLS uses squares.
B)zero.
C)dependent on whether the explanatory variable is mostly positive or negative.
D)unobservable since the population regression function is unknown. - Correct Answers
-B) Zero
In a randomized controlled experiment:
A) there is a control group and a treatment group.
B) you control for the effect that random numbers are not truly randomly generated
C) you control for random answers
D) the control group receives treatment on even days only - Correct Answers -A) there
is a control group and a treatment group.
The reason why economists do not use experimental data more frequently is for all of
the
following reasons EXCEPT that real-world experiments:
A) cannot be executed in economics.
B) with humans are difficult to administer.
C) are often unethical.
D) have flaws relative to ideal randomized controlled experiments - Correct Answers -A)
cannot be executed in economics.
The most frequently used experimental or observational data in econometrics are of the
following type:
A) cross-sectional data.
B) randomly generated data.
