Introduction to Econometrics, 4e (Stock/Watson)
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x
Chapter 1 Economic Questions and Data
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Test Bank
xz Page 1
xz
, 1.1 Multiple Choice Questions xz xz
1) Analyzing the behavior of unemployment rates across U.S. states in March of 2006 is
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anexample of using:
z
x xz xz
A) time series data.
xz xz
B) panel data. xz
C) cross-sectional data. xz
D) experimental data xz
.Answer: C
z
x x z
2) Studying inflation in the United States from 1970 to 2006 is an example of using:
xz xz xz xz xz xz xz xz xz xz xz xz xz xz
A) randomized controlled experiments. xz xz
B) time series data.
xz xz
C) panel data. xz
D) cross-
sectional data.Answer: xz xz
x z B
3) Analyzing the effect of minimum wage changes on teenage employment across the 4
xz xz xz xz xz xz xz xz xz xz xz xz
8contiguous U.S. states from 1980 to 2004 is an example of using:
z
x xz xz xz xz xz xz xz xz xz xz xz
A) time series data.
xz xz
B) panel data. xz
C) having a treatment group vs. a control group, since only teenagers receive minimum wages.
xz xz xz xz xz xz xz xz xz xz xz xz xz
D) cross-
sectional data.Answer: xz xz
x z B
4) Panel data: xz
A) is also called longitudinal data.
xz xz xz xz
B) is the same as time series data.
xz xz xz xz xz xz
C) studies a group of people at a point in time.
xz xz xz xz xz xz xz xz xz
D) typically uses control and treatment groups
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.Answer: A
z
x x z
5) Econometrics can be defined as follows with the exception of:
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Test Bank xz Page 2
xz
, A) the science of testing economic theory.
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B) fitting mathematical economic models to real-world data.
xz xz xz xz xz xz
C) a set of tools used for forecasting future values of economic variables.
xz xz xz xz xz xz xz xz xz xz xz
D) measuring the height of economists xz xz xz xz
.Answer: D
z
x x z
6) To provide quantitative answers to policy questions:
xz xz xz xz xz xz
A) it is typically sufficient to use common sense.
xz xz xz xz xz xz xz
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 quantifiabl
xz xz xz xz xz xz xz xz
e.Answer: C
z
x x 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. xz xz xz xz xz xz xz xz xz xz xz
B) one U.S. state increases minimum wages and an adjacent state does not, an
xz xz xz xz xz xz xz xz xz xz xz xz
demployment differences are observed.
z
x xz xz xz
C) random variables are controlled for by holding constant other factors.
xz xz xz xz xz xz xz xz xz
D) some 5th graders in a specific elementary school are allowed to use computers at scho
xz xz xz xz xz xz xz xz xz xz xz xz xz xz
olwhile others are not, and their end-of-
z
x xz xz xz xz xz xz
year performance is compared holding constant otherfactors.
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x
Answer: D x z
8) Ideal randomized controlled experiments in economics are:
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A) often performed in practice. xz xz xz
B) often used by the Federal Reserve to study the effects of monetary policy.
xz xz xz xz xz xz xz xz xz xz xz xz
C) useful because they give a definition of a causal effect.
xz xz xz xz xz xz xz xz xz
D) sometimes used by universities to determine who graduates in four years rather tha
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nfive. Answer: C
z
x xz x z
9) Most economic data are obtained:xz xz xz xz
A) through randomized controlled experiments. xz xz xz
B) by calibration methods.
xz xz
C) through textbook examples typically involving ten observation points.
xz xz xz xz xz xz xz
D) by observing real- xz xz
world behavior.Answer: D xz xz x z
Test Bank xz Page 3
xz
, 10) One of the primary advantages of using econometrics over typical results from econom
xz xz xz xz xz xz xz xz xz xz xz xz
ictheory, is that:
z
x xz xz
A) it potentially provides you with quantitative answers for a policy problem rather than simpl
xz xz xz xz xz xz xz xz xz xz xz xz xz
ysuggesting the direction (positive/negative) of the response.
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B) teaching you how to use statistical packages xz xz xz xz xz xz
C) learning how to invert a 4 by 4 matrix. xz xz xz xz xz xz xz xz
D) all of the above xz xz xz
.Answer: A
z
x x z
11) In a randomized controlled experiment:
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A) there is a control group and a treatment group.
xz xz xz xz xz xz xz xz
B) you control for the effect that random numbers are not truly randomly generated
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C) you control for random answers
xz xz xz xz
D) the control group receives treatment on even days only
xz xz xz xz xz xz xz xz
.Answer: A
z
x x z
12) The reason why economists do not use experimental data more frequently is for all of t
xz xz xz xz xz xz xz xz xz xz xz xz xz xz xz
hefollowing reasons EXCEPT that real-world experiments:
z
x xz xz xz xz xz
A) cannot be executed in economics. xz xz xz xz
B) with humans are difficult to administer.
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C) are often unethical. xz xz
D) have flaws relative to ideal randomized controlled experiments
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.Answer: A
z
x x z
13) The most frequently used experimental or observational data in econometrics are of t
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hefollowing type:
z
x xz
A) cross-sectional data. xz
B) randomly generated data. xz xz
C) time series data. xz xz
D) panel data. xz xz
Answer: A x z
14) In the graph below, the vertical axis represents average real GDP growth for 65 countri
xz xz xz xz xz xz xz xz xz xz xz xz xz xz
es over the period 1960-
xz xz xz xz
1995, and the horizontal axis shows the average trade share within thesecountries.
xz xz xz xz xz xz xz xz xz xz xz z
x
Test Bank xz Page 4
xz
xz xz xz xz z
x
Chapter 1 Economic Questions and Data
xz x z xz xz xz
Test Bank
xz Page 1
xz
, 1.1 Multiple Choice Questions xz xz
1) Analyzing the behavior of unemployment rates across U.S. states in March of 2006 is
xz xz xz xz xz xz xz xz xz xz xz xz xz xz
anexample of using:
z
x xz xz
A) time series data.
xz xz
B) panel data. xz
C) cross-sectional data. xz
D) experimental data xz
.Answer: C
z
x x z
2) Studying inflation in the United States from 1970 to 2006 is an example of using:
xz xz xz xz xz xz xz xz xz xz xz xz xz xz
A) randomized controlled experiments. xz xz
B) time series data.
xz xz
C) panel data. xz
D) cross-
sectional data.Answer: xz xz
x z B
3) Analyzing the effect of minimum wage changes on teenage employment across the 4
xz xz xz xz xz xz xz xz xz xz xz xz
8contiguous U.S. states from 1980 to 2004 is an example of using:
z
x xz xz xz xz xz xz xz xz xz xz xz
A) time series data.
xz xz
B) panel data. xz
C) having a treatment group vs. a control group, since only teenagers receive minimum wages.
xz xz xz xz xz xz xz xz xz xz xz xz xz
D) cross-
sectional data.Answer: xz xz
x z B
4) Panel data: xz
A) is also called longitudinal data.
xz xz xz xz
B) is the same as time series data.
xz xz xz xz xz xz
C) studies a group of people at a point in time.
xz xz xz xz xz xz xz xz xz
D) typically uses control and treatment groups
xz xz xz xz xz
.Answer: A
z
x x z
5) Econometrics can be defined as follows with the exception of:
xz xz xz xz xz xz xz xz xz
Test Bank xz Page 2
xz
, A) the science of testing economic theory.
xz xz xz xz xz
B) fitting mathematical economic models to real-world data.
xz xz xz xz xz xz
C) a set of tools used for forecasting future values of economic variables.
xz xz xz xz xz xz xz xz xz xz xz
D) measuring the height of economists xz xz xz xz
.Answer: D
z
x x z
6) To provide quantitative answers to policy questions:
xz xz xz xz xz xz
A) it is typically sufficient to use common sense.
xz xz xz xz xz xz xz
B) you should interview the policy makers involved.
xz xz xz xz xz xz
C) you should examine empirical evidence.
xz xz xz xz
D) is typically impossible since policy questions are not quantifiabl
xz xz xz xz xz xz xz xz
e.Answer: C
z
x x z
7) An example of a randomized controlled experiment is when:
xz xz xz xz xz xz xz xz
A) households receive a tax rebate in one year but not the other. xz xz xz xz xz xz xz xz xz xz xz
B) one U.S. state increases minimum wages and an adjacent state does not, an
xz xz xz xz xz xz xz xz xz xz xz xz
demployment differences are observed.
z
x xz xz xz
C) random variables are controlled for by holding constant other factors.
xz xz xz xz xz xz xz xz xz
D) some 5th graders in a specific elementary school are allowed to use computers at scho
xz xz xz xz xz xz xz xz xz xz xz xz xz xz
olwhile others are not, and their end-of-
z
x xz xz xz xz xz xz
year performance is compared holding constant otherfactors.
xz xz xz xz xz xz z
x
Answer: D x z
8) Ideal randomized controlled experiments in economics are:
xz xz xz xz xz xz
A) often performed in practice. xz xz xz
B) often used by the Federal Reserve to study the effects of monetary policy.
xz xz xz xz xz xz xz xz xz xz xz xz
C) useful because they give a definition of a causal effect.
xz xz xz xz xz xz xz xz xz
D) sometimes used by universities to determine who graduates in four years rather tha
xz xz xz xz xz xz xz xz xz xz xz xz
nfive. Answer: C
z
x xz x z
9) Most economic data are obtained:xz xz xz xz
A) through randomized controlled experiments. xz xz xz
B) by calibration methods.
xz xz
C) through textbook examples typically involving ten observation points.
xz xz xz xz xz xz xz
D) by observing real- xz xz
world behavior.Answer: D xz xz x z
Test Bank xz Page 3
xz
, 10) One of the primary advantages of using econometrics over typical results from econom
xz xz xz xz xz xz xz xz xz xz xz xz
ictheory, is that:
z
x xz xz
A) it potentially provides you with quantitative answers for a policy problem rather than simpl
xz xz xz xz xz xz xz xz xz xz xz xz xz
ysuggesting the direction (positive/negative) of the response.
xz xz xz xz xz xz xz
B) teaching you how to use statistical packages xz xz xz xz xz xz
C) learning how to invert a 4 by 4 matrix. xz xz xz xz xz xz xz xz
D) all of the above xz xz xz
.Answer: A
z
x x z
11) In a randomized controlled experiment:
xz xz xz xz
A) there is a control group and a treatment group.
xz xz xz xz xz xz xz xz
B) you control for the effect that random numbers are not truly randomly generated
xz xz xz xz xz xz xz xz xz xz xz xz
C) you control for random answers
xz xz xz xz
D) the control group receives treatment on even days only
xz xz xz xz xz xz xz xz
.Answer: A
z
x x z
12) The reason why economists do not use experimental data more frequently is for all of t
xz xz xz xz xz xz xz xz xz xz xz xz xz xz xz
hefollowing reasons EXCEPT that real-world experiments:
z
x xz xz xz xz xz
A) cannot be executed in economics. xz xz xz xz
B) with humans are difficult to administer.
xz xz xz xz xz
C) are often unethical. xz xz
D) have flaws relative to ideal randomized controlled experiments
xz xz xz xz xz xz xz
.Answer: A
z
x x z
13) The most frequently used experimental or observational data in econometrics are of t
xz xz xz xz xz xz xz xz xz xz xz xz
hefollowing type:
z
x xz
A) cross-sectional data. xz
B) randomly generated data. xz xz
C) time series data. xz xz
D) panel data. xz xz
Answer: A x z
14) In the graph below, the vertical axis represents average real GDP growth for 65 countri
xz xz xz xz xz xz xz xz xz xz xz xz xz xz
es over the period 1960-
xz xz xz xz
1995, and the horizontal axis shows the average trade share within thesecountries.
xz xz xz xz xz xz xz xz xz xz xz z
x
Test Bank xz Page 4
xz
