Test Bank
z Page 1
z
, Introduction to Econometrics, 4e (Stock/Watson)Chapter 1 Economic
z z z z z z z z
Questions and Data z z
1.1 Multiple Choice Questions z z
1) Analyzing the behavior of unemployment rates across U.S. states in March of 2006 is anexa
z z z z z z z z z z z z z z z
mple of using:
z z
A) time series data.
z z
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:
z z z z z z z z z z z z z z
A) randomized controlled experiments.
z z
B) time series data.
z z
C) panel data. z
D) cross-
sectional data.Answer:
z z z
B
3) Analyzing the effect of minimum wage changes on teenage employment across the 48co
z z z z z z z z z z z z z
Test Bank
z Page 2
z
, ntiguous U.S. states from 1980 to 2004 is an example of using:
z z z z z z z z z z z
A) time series data. z z
B) panel data. z
C) having a treatment group vs. a control group, since only teenagers receive minimum wages.
z z z z z z z z z z z z z
D) cross-
sectional data.Answer: z z z
B
4) Panel data: z
A) is also called longitudinal data.
z z z z
B) is the same as time series data.
z z z z z z
C) studies a group of people at a point in time. z z z z z z z z z
D) typically uses control and treatment groups. z z z z z z
Answer: A z
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.
z z z z z
B) fitting mathematical economic models to real-world data.
z z z z z z
C) a set of tools used for forecasting future values of economic variables.
z z z z z z z z z z z
D) measuring the height of economists. z z z z z
Answer: D z
6) To provide quantitative answers to policy questions:
z z z z z z
A) it is typically sufficient to use common sense.
z z z z z z z
B) you should interview the policy makers involved.
z z z z z z
C) you should examine empirical evidence.
z z z z
D) is typically impossible since policy questions are not quantifiable.A
z z z z z z z z z
nswer: C z
7) An example of a randomized controlled experiment is when:
z z z z z z z z
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, andem
z z z z z z z z z z z z z
ployment differences are observed. z z z
C) random variables are controlled for by holding constant other factors.
z z z z z z z z z
D) some 5th graders in a specific elementary school are allowed to use computers at schoolwhi
z z z z z z z z z z z z z z z
le others are not, and their end-of-
z z z z z z
year performance is compared holding constant otherfactors.
z z z z z z z
Test Bankz Page 3
z
, Answer: D z
8) Ideal randomized controlled experiments in economics are:
z z z z z z
A) often performed in practice. z z z
B) often used by the Federal Reserve to study the effects of monetary policy.
z z z z z z z z z z z z
C) useful because they give a definition of a causal effect.
z z z z z z z z z
D) sometimes used by universities to determine who graduates in four years rather thanfiv
z z z z z z z z z z z z z
e. Answer: C
z z
9) Most economic data are obtained:
z z z z
A) through randomized controlled experiments. z z z
B) by calibration methods.
z z
C) through textbook examples typically involving ten observation points.
z z z z z z z
D) by observing real-
z z
world behavior.Answer: D
z z z
10) One of the primary advantages of using econometrics over typical results from economicthe
z z z z z z z z z z z z z
ory, is that:
z z
A) it potentially provides you with quantitative answers for a policy problem rather than simplysug
z z z z z z z z z z z z z z
gesting the direction (positive/negative) of the response.
z z z z z z
B) teaching you how to use statistical packages z z z z z z
C) learning how to invert a 4 by 4 matrix. z z z z z z z z
D) all of the above.
z z z z
Answer: A z
11) In a randomized controlled experiment:
z z z z
A) there is a control group and a treatment group.
z z z z z z z z
B) you control for the effect that random numbers are not truly randomly generated
z z z z z z z z z z z z
C) you control for random answers
z z z z
D) the control group receives treatment on even days only.A
z z z z z z z z z
nswer: A z
12) The reason why economists do not use experimental data more frequently is for all of thefoll
z z z z z z z z z z z z z z z z
owing reasons EXCEPT that real-world experiments:
z z z z z
A) cannot be executed in economics. z z z z
B) with humans are difficult to administer.
z z z z z
Test Bank
z Page 4
z
z Page 1
z
, Introduction to Econometrics, 4e (Stock/Watson)Chapter 1 Economic
z z z z z z z z
Questions and Data z z
1.1 Multiple Choice Questions z z
1) Analyzing the behavior of unemployment rates across U.S. states in March of 2006 is anexa
z z z z z z z z z z z z z z z
mple of using:
z z
A) time series data.
z z
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:
z z z z z z z z z z z z z z
A) randomized controlled experiments.
z z
B) time series data.
z z
C) panel data. z
D) cross-
sectional data.Answer:
z z z
B
3) Analyzing the effect of minimum wage changes on teenage employment across the 48co
z z z z z z z z z z z z z
Test Bank
z Page 2
z
, ntiguous U.S. states from 1980 to 2004 is an example of using:
z z z z z z z z z z z
A) time series data. z z
B) panel data. z
C) having a treatment group vs. a control group, since only teenagers receive minimum wages.
z z z z z z z z z z z z z
D) cross-
sectional data.Answer: z z z
B
4) Panel data: z
A) is also called longitudinal data.
z z z z
B) is the same as time series data.
z z z z z z
C) studies a group of people at a point in time. z z z z z z z z z
D) typically uses control and treatment groups. z z z z z z
Answer: A z
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.
z z z z z
B) fitting mathematical economic models to real-world data.
z z z z z z
C) a set of tools used for forecasting future values of economic variables.
z z z z z z z z z z z
D) measuring the height of economists. z z z z z
Answer: D z
6) To provide quantitative answers to policy questions:
z z z z z z
A) it is typically sufficient to use common sense.
z z z z z z z
B) you should interview the policy makers involved.
z z z z z z
C) you should examine empirical evidence.
z z z z
D) is typically impossible since policy questions are not quantifiable.A
z z z z z z z z z
nswer: C z
7) An example of a randomized controlled experiment is when:
z z z z z z z z
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, andem
z z z z z z z z z z z z z
ployment differences are observed. z z z
C) random variables are controlled for by holding constant other factors.
z z z z z z z z z
D) some 5th graders in a specific elementary school are allowed to use computers at schoolwhi
z z z z z z z z z z z z z z z
le others are not, and their end-of-
z z z z z z
year performance is compared holding constant otherfactors.
z z z z z z z
Test Bankz Page 3
z
, Answer: D z
8) Ideal randomized controlled experiments in economics are:
z z z z z z
A) often performed in practice. z z z
B) often used by the Federal Reserve to study the effects of monetary policy.
z z z z z z z z z z z z
C) useful because they give a definition of a causal effect.
z z z z z z z z z
D) sometimes used by universities to determine who graduates in four years rather thanfiv
z z z z z z z z z z z z z
e. Answer: C
z z
9) Most economic data are obtained:
z z z z
A) through randomized controlled experiments. z z z
B) by calibration methods.
z z
C) through textbook examples typically involving ten observation points.
z z z z z z z
D) by observing real-
z z
world behavior.Answer: D
z z z
10) One of the primary advantages of using econometrics over typical results from economicthe
z z z z z z z z z z z z z
ory, is that:
z z
A) it potentially provides you with quantitative answers for a policy problem rather than simplysug
z z z z z z z z z z z z z z
gesting the direction (positive/negative) of the response.
z z z z z z
B) teaching you how to use statistical packages z z z z z z
C) learning how to invert a 4 by 4 matrix. z z z z z z z z
D) all of the above.
z z z z
Answer: A z
11) In a randomized controlled experiment:
z z z z
A) there is a control group and a treatment group.
z z z z z z z z
B) you control for the effect that random numbers are not truly randomly generated
z z z z z z z z z z z z
C) you control for random answers
z z z z
D) the control group receives treatment on even days only.A
z z z z z z z z z
nswer: A z
12) The reason why economists do not use experimental data more frequently is for all of thefoll
z z z z z z z z z z z z z z z z
owing reasons EXCEPT that real-world experiments:
z z z z z
A) cannot be executed in economics. z z z z
B) with humans are difficult to administer.
z z z z z
Test Bank
z Page 4
z
