ECO 391 Exam #2 | Actual study |
Questions and verified Answers
OLS - ANSW-a statistical technique that uses sample data to estimate the true population relationship
between two (or more) variables
-allows us to find 𝑏0 & 𝑏1
population regression line - ANSW-E(Yi I Xi) = Bo + B1Xi
sample regression equation (estimated regression equation) - ANSW-Ŷi = bo + b1Xi
residual (*e*i) - ANSW-represents the distance between the sample regression line and the observed
data point
best fit - ANSW-The line that minimizes the sum of the residuals is considered the one that gives us the
_________
The Method of OLS - ANSW-produces a line that minimizes the sum of the
squared vertical distances from the sample regression
line to the observed data points
*sum of the residuals = 0
b1 - ANSW-the estimated slope coefficient of a simple linear regression model
rxy - ANSW-the sample correlation coefficient between x and y
scatter plot - ANSW-a graphical tool that helps in determining whether or not two variables are related in
some systematic way
4 Reasons for Using Scatter Plots - ANSW-1. Relationship exists between variables
2. If variables are positively (directly) or negatively (inversely) related
3. Relationship is linear or non-linear
4. Strength of relationship (weak or strong)
sample covariance - ANSW-a measure of the linear relationship between two
variables, x and y
-tells us if relationship is positive or negative, but NOTHING about strength
sample correlation coefficient - ANSW-gauges the strength and the nature of the linear relationship
between two variables, x and y
*does not indicate which variable causes the other
Sx and Sy - ANSW-the sample standard deviation of x and y, respectively
rho (p) - ANSW-population correlation coefficient
-a relationship exists if p is significantly different from 0
regression analysis - ANSW-a statistical tool that allows us to look at the impact of one variable on
another while controlling for potential confounding effects
reasons to use regression analysis - ANSW-1. To quantify theories (describe economic reality)
2. To test our theories (test hypothesis)
3. To measure the strength of a relationship
Questions and verified Answers
OLS - ANSW-a statistical technique that uses sample data to estimate the true population relationship
between two (or more) variables
-allows us to find 𝑏0 & 𝑏1
population regression line - ANSW-E(Yi I Xi) = Bo + B1Xi
sample regression equation (estimated regression equation) - ANSW-Ŷi = bo + b1Xi
residual (*e*i) - ANSW-represents the distance between the sample regression line and the observed
data point
best fit - ANSW-The line that minimizes the sum of the residuals is considered the one that gives us the
_________
The Method of OLS - ANSW-produces a line that minimizes the sum of the
squared vertical distances from the sample regression
line to the observed data points
*sum of the residuals = 0
b1 - ANSW-the estimated slope coefficient of a simple linear regression model
rxy - ANSW-the sample correlation coefficient between x and y
scatter plot - ANSW-a graphical tool that helps in determining whether or not two variables are related in
some systematic way
4 Reasons for Using Scatter Plots - ANSW-1. Relationship exists between variables
2. If variables are positively (directly) or negatively (inversely) related
3. Relationship is linear or non-linear
4. Strength of relationship (weak or strong)
sample covariance - ANSW-a measure of the linear relationship between two
variables, x and y
-tells us if relationship is positive or negative, but NOTHING about strength
sample correlation coefficient - ANSW-gauges the strength and the nature of the linear relationship
between two variables, x and y
*does not indicate which variable causes the other
Sx and Sy - ANSW-the sample standard deviation of x and y, respectively
rho (p) - ANSW-population correlation coefficient
-a relationship exists if p is significantly different from 0
regression analysis - ANSW-a statistical tool that allows us to look at the impact of one variable on
another while controlling for potential confounding effects
reasons to use regression analysis - ANSW-1. To quantify theories (describe economic reality)
2. To test our theories (test hypothesis)
3. To measure the strength of a relationship
