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,Test Bank
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, Introduction to Econometrics, 4e (Stock/Watson)
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Chapter 1 Economic Questions and Data
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1.1 Multiple Choice Questions Z Z
1) Analyzing the behavior of unemployment rates across U.S. states in March of 2006 is ane
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xample of using:
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A) time series data.
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B) panel data. Z
C) cross-sectional data. Z
D) experimental data. Z Z
Answer: C Z
2) Studying inflation in the United States from 1970 to 2006 is an example of using:
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A) randomized controlled experiments. Z Z
B) time series data.
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C) panel data. Z
D) cross-
sectional data.Answer:
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3) Analyzing the effect of minimum wage changes on teenage employment across the 48c
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ontiguous U.S. states from 1980 to 2004 is an example of using:
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A) time series data.
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B) panel data. Z
C) having a treatment group vs. a control group, since only teenagers receive minimum wages.
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D) cross-
sectional data.Answer:
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4) Panel data: Z
A) is also called longitudinal data.
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B) is the same as time series data.
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C) studies a group of people at a point in time.
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D) typically uses control and treatment groups.
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Answer: A Z
Test Bank
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, 5) Econometrics can be defined as follows with the exception of: Z Z Z Z Z Z Z Z Z
A) the science of testing economic theory.
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B) fitting mathematical economic models to real-world data.
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C) a set of tools used for forecasting future values of economic variables.
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D) measuring the height of economists. Z Z Z Z Z
Answer: D Z
6) To provide quantitative answers to policy questions:
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A) it is typically sufficient to use common sense.
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B) you should interview the policy makers involved.
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C) you should examine empirical evidence.
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D) is typically impossible since policy questions are not quantifiable.
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Answer: C Z
7) An example of a randomized controlled experiment is when:
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A) households receive a tax rebate in one year but not the other. Z Z Z Z Z Z Z Z Z Z Z
B) one U.S. state increases minimum wages and an adjacent state does not, ande
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mployment differences are observed. Z Z Z
C) random variables are controlled for by holding constant other factors.
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D) some 5th graders in a specific elementary school are allowed to use computers at schoolw
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hile others are not, and their end-of-
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year performance is compared holding constant otherfactors.
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Answer: D Z
8) Ideal randomized controlled experiments in economics are:
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A) often performed in practice. Z Z Z
B) often used by the Federal Reserve to study the effects of monetary policy.
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C) useful because they give a definition of a causal effect.
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D) sometimes used by universities to determine who graduates in four years rather thanfi
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ve. Answer: C
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9) Most economic data are obtained:
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A) through randomized controlled experiments. Z Z Z
B) by calibration methods.
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C) through textbook examples typically involving ten observation points.
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D) by observing real-
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Test Bank
Z Page 4
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Z Page 1
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,Test Bank
Z Page 2
Z
, Introduction to Econometrics, 4e (Stock/Watson)
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Chapter 1 Economic Questions and Data
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1.1 Multiple Choice Questions Z Z
1) Analyzing the behavior of unemployment rates across U.S. states in March of 2006 is ane
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xample of using:
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A) time series data.
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B) panel data. Z
C) cross-sectional data. Z
D) experimental data. Z Z
Answer: C Z
2) Studying inflation in the United States from 1970 to 2006 is an example of using:
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A) randomized controlled experiments. Z Z
B) time series data.
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C) panel data. Z
D) cross-
sectional data.Answer:
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3) Analyzing the effect of minimum wage changes on teenage employment across the 48c
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ontiguous U.S. states from 1980 to 2004 is an example of using:
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A) time series data.
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B) panel data. Z
C) having a treatment group vs. a control group, since only teenagers receive minimum wages.
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D) cross-
sectional data.Answer:
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4) Panel data: Z
A) is also called longitudinal data.
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B) is the same as time series data.
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C) studies a group of people at a point in time.
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D) typically uses control and treatment groups.
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Answer: A Z
Test Bank
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, 5) Econometrics can be defined as follows with the exception of: Z Z Z Z Z Z Z Z Z
A) the science of testing economic theory.
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B) fitting mathematical economic models to real-world data.
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C) a set of tools used for forecasting future values of economic variables.
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D) measuring the height of economists. Z Z Z Z Z
Answer: D Z
6) To provide quantitative answers to policy questions:
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A) it is typically sufficient to use common sense.
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B) you should interview the policy makers involved.
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C) you should examine empirical evidence.
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D) is typically impossible since policy questions are not quantifiable.
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Answer: C Z
7) An example of a randomized controlled experiment is when:
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A) households receive a tax rebate in one year but not the other. Z Z Z Z Z Z Z Z Z Z Z
B) one U.S. state increases minimum wages and an adjacent state does not, ande
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mployment differences are observed. Z Z Z
C) random variables are controlled for by holding constant other factors.
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D) some 5th graders in a specific elementary school are allowed to use computers at schoolw
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hile others are not, and their end-of-
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year performance is compared holding constant otherfactors.
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Answer: D Z
8) Ideal randomized controlled experiments in economics are:
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A) often performed in practice. Z Z Z
B) often used by the Federal Reserve to study the effects of monetary policy.
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C) useful because they give a definition of a causal effect.
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D) sometimes used by universities to determine who graduates in four years rather thanfi
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ve. Answer: C
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9) Most economic data are obtained:
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A) through randomized controlled experiments. Z Z Z
B) by calibration methods.
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C) through textbook examples typically involving ten observation points.
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D) by observing real-
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Test Bank
Z Page 4
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