Non-experimental data are not accumulated through controlled experiments on individuals, . firms, or segments of the economy.

Which of the following statements is correct?
1.

a Experimental data are accumulated through controlled experiments on individuals, firms, or
. segments of the economy.
b Non-experimental data are not accumulated through controlled experiments on individuals,
. firms, or segments of the economy.
c Nonexperimental data are sometimes called observational data, or retrospective data, to
. emphasize the fact that the researcher is a passive collector of data.
d All of the above.

Question
Which of the following statements is correct?
1.

a Experimental data are accumulated through controlled experiments on individuals, firms, or
. segments of the economy.
b Nonexperimental data are not accumulated through controlled experiments on individuals,
. firms, or segments of the economy.
c Nonexperimental data are sometimes called observational data, or retrospective data, to
. emphasize the fact that the researcher is a passive collector of data.
d All of the above.
.

10 points

QUESTION 2
1.
Which of the following statements is correct?
a Econometrics is based upon the development of statistical methods for estimating economic
. relationships.
b Econometrics is based upon the development of statistical methods for testing economic
. theories.
c Econometrics is based upon the development of statistical methods for evaluating and
. implementing government and business policy.
d All of the above.
.

10 points

QUESTION 3
1.
Which of the following statements is correct?
a The first step of an empirical economic analysis is the careful formulation of the question of
. interest.
b In most cases, especially those that involve the testing of economic theories, the second step
. of an empirical economic analysis is the construction of a formal economic model, which

consists of mathematical equations that describe various relationships.
c The third step of an empirical economic analysis is the construction of an econometric model,
. which specifies the variables that will be used and functional forms of the economic

relationships that will be estimated.
d All of the above.
.

10 points

QUESTION 4
1.
Consider the following econometric model: wage = ?0 + ?1educ + ?2exper + u, where the
variables wage, educ and exper measure individuals’ hourly wage, years of formal education and
years of workforce experience, respectively. Which of the following statements is correct?

a u is the error term or disturbance term; it contains unobserved factors that affect a person’s
. wage, such as “innate ability”.
b ?0, ?1 and ?2 are the unknown parameters of the econometric model; they describe the
.

directions and strengths of the relationship betweenwage and the factors used to determine a
person’s wage in the model.
c If we are specifically concerned about the effects of years of workforce experience on a
.
person’s wage level, then ?2 is the parameter of interest.
d All of the above.
.

10 points

QUESTION 5
1.
Consider the following econometric model: wage = ?0 + ?1educ + ?2exper + u, where the
variables wage, educ and exper measure individuals’ hourly wage, years of formal education and
years of workforce experience, respectively. Which of the following statements is correct?
a The final steps of an empirical economic analysis, after data on the relevant variables have
. been collected, include using econometric methods to estimate the unknown parameters in
the econometric model.
b The final steps of an empirical economic analysis, after data on the relevant variables have
. been collected, include formally testing hypotheses of interest.
c In the context of this econometric model, the hypothesis that years of education have no
. effect on a person’s wage level is equivalent to ? = 0.
1

d All of the above.
.

10 points

QUESTION 6
1.
Which of the following statements is correct?
a A cross-sectional data set consists of a sample of individuals, households, firms, cities, states,
. countries, or a variety of other units, taken at a given point in time.
b We can often assume that cross-sectional data have been obtained by random sampling of the
. underlying population.
c Sometimes, sample selection problem may lead to situations where random sampling is not
. appropriate as an assumption for analyzing cross-sectional data.
d All of the above.
.

10 points

QUESTION 7
1.
Consider the variable married which specifies a person’s marital status. Which of the
following statements is correct?
a Binary variables take only one of two values

.
b Binary variables are used to specify qualitative features of units of interest in our econometric
. models.
c
.

The binary variable married takes on the value one to indicate the person is
married and it takes on the value zero to indicate it the person is not
married.

d All of the above.
.

QUESTION 8
1.

10 points

Assume that the data used to estimate our econometric models are
available on an annual basis. The variable year keeps track of the year all other
variables of interest in our econometric model were measured. Which of the
following statements is correct?
a A time series data set consists of observations on a variable or several variables over time.
.
b Econometric models estimated using a time series data set, or a pooled cross section data set,
. or a panel/longitudinal data set, must include a yearvariable.
c A key feature of time series data is that economic observations can rarely, if ever, be assumed
. to be independent across time.
d All of the above.
.

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