Revision Exercises for Econometrics Course

Chapter 1: Introduction to Econometrics

1. Which one of the following statements is correct?
A) Economic theory makes statements that are mostly quantitative.
B) Mathematical economics is used to express economic theory in mathematical
form with empirical verification of the theory.
C) Economic Statistics is not being concerned with using the collected data to
test economic theories
D) Mathematical statistics provides many of tools for economic studies than
econometrics.
2. Which one of the following is not true considering Econometrics?
A. It assumes that relationships are not exact/deterministic
B. Econometric methods are designed to take in to account random disturbances
C. Econometrics provides numerical values of the coefficients of economic
phenomena.
D. None
3. Which one of the following is not included under Specification Stage of Econometrics
Model Analysis?
A) determination of the dependent and the explanatory variables
B) Examination of the degree of correlation between the explanatory variables
C) Functional forms of the model
D) A priori theoretical expectation about the sign and size of the parameters of the
function.
4. Which one is the best definition of Econometrics Model?
A. Models on relationships between/among economic variables.
B. Economic models combined with assumptions about the random nature of the
data
C. Simplified representations of the real world phenomena.
D. All
5. Selection of the appropriate econometric technique is under which stage of
Econometrics Analysis
A) Specification Stage
B) Estimation Stage

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C) Evaluation Stage
D) All
6. Which one is create deviations from the exact behavioral patterns suggested by
economic theory and mathematical economics?
A) Dependent Variables
B) Independent Variables
C) Random Noises
D) All
7. Which one of the following factors may not include under residual?
A) Omitted variables,
B) Measurement error in the dependent variable and/or wrong functional form.
C) Randomness of human behavior
D) Effect of explanatory variable
8. Which is data on one or more variables collected at the same point in time?
A) Cross-Section Data
B) Time Series Data
C) Pooled Data
D) Longitudinal Data
9. Which pair includes only the quantitative data?
A) Quantity Demand and Marital Status
B) Gender and Money Supply
C) Level of Crime and stock of price
D) GDP and Inflation rate
10. Which one of the following is Time Series data?
A) Teff marketing performance in 2020
B) Data on Educational level from 2010 to 2018
C) Level of Unemployment rate in Ethiopia during the Prosperity Government
D) The census of population conducted by CSA of Ethiopia in 2015
11. The combination of Time series and Cross section data is termed as…..
A) Primary data
B) Secondary data
C) Panel data
D) None of these
12) The NSSO data sets are:
A) Cross section data
B) Time series data

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 C) Panel data
D) Pooled data
13) Consider the following statements and choose the correct answer
i) Pooled data imply combination of time series and cross sectional data.
ii) Panel data is special type of pooled data in which the same cross-section unit is
surveyed over time
A) Only a is correct
B) Only b is correct
C) Both a and b are wrong
D) Both A and B are correct…
14) The last step the econometrician has to take in attempting the study
A) Estimation of the parameters of the econometric model
B) Hypothesis testing
C) Forecasting or prediction
D) Using the model for control or policy purpose
15. The first, and most important, step the econometrician has to take in attempting the
study of any relationship between variables is
A) Formulation of the maintained hypothesis
B) Specification of the statistical model
C) Obtaining the data
D) Forecasting/prediction

Chapter 2: Correlation Theory

1. Which one is representing the linear interdependence of two variables or sets of data?
A) Correlation Coefficient
B) Variance
C) Covariance
D) All

Chapter 3: Simple Linear Regression

Concepts of Regression
1. The number of Explanatory variables in a simple regression is….

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A) One B) Zero C) Two D) More than Two
2. Explanatory Variable is also known as………
A) Regressor B) Explained Variable C) Response Variable D) Dependent Variable
3. Independent Variable is also known as………
a) Explanatory Variable b) Explained Variable c) Response Variable d) Dependent
Variable
4. The statement that-There can be more than one SRF representing a population
regression function is
A) Always true b) Always false c) Sometimes true, sometimes false d) Nonsense
statement
5) In a regression model, Y= +X+ui:
A) Y is the regressor; X is the explanatory variable
B) Y is the regressant; X is the explanatory variable
C) Y is the independent variable; X is the dependent variable
D) Y is the independent variable; X is the outcome variable
6) Sample regression function is the estimated version of the___________
A) Estimated version of population regression function
B) Estimated version of population correlation function
C) Not an estimated version of population regression function
D) Both b and c
7) Full form of OLS
A) Ordinary least square method
B) Ordinary least statistical method
C) Ordinary least sample method
D) Both b and c
8) The conditional mean of Y is
A) The expected value of Y for given values of the independent variables, Xi
B) The expected value of Y for given values of the independent variables, ui.
C) The expected value of Y for given values of the independent variables, Yi.
D) Both b and c
9) Linear Regression is estimated through: A) MLE B) FIML C) PIML D) OLS
10) CLRM full form
A) Classical linear regression model…
B) Classical linear regression method

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 C) Classical linear relationship model
D) D) Classical linear relationship method
11) In the regression function Y=α + βX +c
A) X is the regressor
B) Y is the regressor
C) X is the regressand
D) none of these
12) The full form of CLR is
A) Class line ratio
B) Classical linear regression
C) Classical linear relation
D) none of the above
13) Locus of the conditional mean of the dependent variable for the fixed values of the
explanatory variable
A) Indifference curve
B) Population regression curve
C) Production Possibility curve
D) None of these.
14) The term regression was coined by a) Francis Galton b) Karl pearson c)Carl
Friedrick Gauss.. d) William Sealy Goss
15) In the Econometrics equation the variable appearing on the left side of the equality
sign is called
A) Independent variable
B) Dependent variable
C) Slack Variable
D) All
16) Which one is represent all those factors that affect dependent variable but are not
taken into account explicitly?
A) Disturbance
B) Error term
C) Random (stochastic) variable.
D) All
17) Which one is different from the rest?
A) Exogenous Variable

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 B) Explained Variable
C) Regressand Variable
D) Dependent Variable
15) Method of ordinary least square is attributed to a) Carl Friedrick Gauss b)William
Sealy Goss c)Durbin Watson d) Both b and c
16) The book ‘Econometric Theory’ was authored by….. a) T C Koopman b) Arther S
Goldberger c) H. Theil d) J R N Stone
17) The name ‘Econometrics’ was coined by……. a) Irving Fischer b) J.M Keynes c)
Ragnar Frisch d) Alfred Marshall
Assumption of Ordinary Least Square Method (OLS)
1) E (Ui,Uj) = 0, when i≠j is termed as,
A) Hetroscedasticity
B) No Multi-Collinearity
C) No-Auto-Correlation
D) Homoscedasticity
2) The assumption of homoscedasticity was expressed as….. a) E(Ui)2 = σi2 b) E(Ui)2 =
σ 2 c) E(Ui)2 = 0 d) E(Ui) = 0
3) Assumptions under CLRM
A) Linear in parameters…
B) Non-linear in parameters
C) X values dependent on error term
D) Positive mean value of disturbance term
4) Assumptions under CLRM
A) Constant variance
B) Heteroscedasticity
C) Autocorrelation between the error terms
D) Autocorrelation between dependent and independent variables
5) Assumption of CLRM
A) No Autocorrelation between error term
B) Positive correlation
C) Negative correlation
D) Both b and d are correct
6) The meaning of linearity in regression theory is that it is
A) Linear in variables

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 B) Linear in variables nonlinear in parameters
C) Linear in parameters
D) Linear in variables and parameters
7) One of the assumption of CLRM is that the number of observations in the sample must
be greater the number of
A) Regressor
B) Regressands
C) Dependent variable
D) Dependent and independent variable
8) Which of the following theorem is utilized to Justify the normality assumption of
random variable in regression model?
A) Euler's theorem
B) Chebyshev's theorem
C) Gauss-Markov theorem
D) Central limit theorem.
Coefficient of Determination
1. In a two variable regression, Y is the dependent variable and X is the independent
variable. The correlation coefficient between Y and X is 0.8. For this, which of the
following is correct?
A) 8% of variations in Y are explained by X
B) 64% of variations in Y are explained by X
C) 0.8% of variations in Y are explained by X
D) 80% of variations in Y are explained by X
2) Choose the correct one from the following
A) 0 ≤ r2 ≤ 1 B) 0 < r2 < 1 C) 0 ≥ r2 ≥1 D) 0 > r2 > 1
3) The coefficient of determination, R2 shows.
A) Proportion of the variation in the dependent variable Y is explained by the
independent variable X….
B) Proportion of the variation in the dependent variable X is explained by the
independent variable Y
C) Proportion of the variation in the dependent variable ui is explained by the
independent variable X
D) Both a and c

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4) In a two variable regression, Y is the dependent variable and X is the independent
variable. The correlation coefficient between Y and X is 0.7. For this, which of the
following is correct?
A) 7% of variations in Y are explained by X
B) 49% of variations in Y are explained by X
C) 0.7% of variations in Y are explained by X
D) 70% of variations in Y are explained by X
5) Consider two regression models (1 and 2) with R2 of 0.52 and 0.89 respectively.
Which among the following statements is true?
A) Goodness of fit in regression 1 is more than that of 2
B) Goodness of fit in regression 2 is more than that of 1
C) Both (a) and (b) are true
D) None of the above
6) The ratio of Explained Sum of Squares to Total Sum of Squares is
A) Co-efficient of correlation
B) Co-efficient of determination
C) Co-efficient of variation
D) Co-efficient of co-variation.
7) Choose the correct one from the following A) r2 = TSS/RSS B) r2 = RSS/TSS C) r2 =
ESS/TSS D) r2 = TSS/ESS
Significance and Hypothesis Testing
1) BLUE is
A) Best Linear Unbiased Estimator
B) Best Linear Unconditional Estimator
C) Basic Linear Unconditional Estimator
D) Both b and c
2) The statistical properties of OLS estimators are
A) Linearity, Unbiasedness, and minimum variance
B) Linearity and Unbiasedness
C) Unbiasedness, and minimum variance
D) Linearity and minimum variance
3) The property of an estimator E(β^1) = β1 is termed as….
A) Linearity
B) Unbiasedness

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 C) Efficiency
D) Accuracy
4) The number of independent values assigned to a statistical distribution is called
A) Degrees of freedom
B) Goodness of fit
C) Trial and error
D) None of the above
5) The assumption that the error terms in a regression model follow the normal
distribution with zero mean and constant variance is required
A) Point estimation of the parameters
B) Hypothesis testing and inference
C) Estimation of the regression model using OLS method
D) Both a and b
6) The standard deviation of the sampling distribution of an estimator is…..
A) t –value
B) RSS
C) Standard Error
D) r2
7) A linear function has:
A) Varying Slope and constant elasticity
B) Varying Slope and varying elasticity
C) Constant Slope and constant elasticity
D) Constant Slope and varying elasticity
8) Degree of freedom refers to:
A) Number of observations minus number of constraints
B) Number of observations plus number of constraints
C) Number of constraints minus number of observations
D) None of the above
9) Given the sample, each estimator will provide only a single point value of the relevant
population parameter is
A) Point estimator
B) Interval estimator
C) Least square estimator
D) Both b and c

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10) Given regression co-efficient = 2 and standard error of 0.5, the value of t ratio is:
a) 2 b) 4 c) 1 d) 2.5
11) Exact level of significance is obtained through:
A) F- ratio
B) t- ratio
C) Chi-square
D) P- value
12) Level of confidence is equal to:
A) 100%
B) 100% + level of significance
C) 100% - level of significance
D) 5%
13) An example of an econometric software : a) Adobe Photoshop b) SPSS c) Microsoft
Word d) None of the above
14) The lowest significance level at which a null hypothesis can be rejected is: (a) F
value. (b) t value. (c) p-value. (d) R square value.
15) An estimate is
A) The numerical value obtained after applying a formula to a given data set
B) The p value obtained after applying a formula to a given data set
C) The table value obtained after applying a formula to a given data set
D) The correlation coefficient obtained after applying a formula to a given data set
16) Student’s’ test was formulated by
A) William Sealy Gosset B)Carl Friedrick Gauss C)Durbin Watson D) Both b and c
17) Reliability of a point estimation is measured by its
A) Standard deviation
B) Standard normal curve
C) Standard error
D) Coefficient of determination
18) Standard error of an estimator is a measure of
A) Population estimator
B) Precision of the estimator
C) Power of the estimator
D) Confidence interval of the estimator

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19) In statistics the reliability of an estimate is measured by its: (a) Standard error. (b)
Student t value. (c) F value. (d) p-value.

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 Chapter 4: Multiple Linear Regression
Based on the following table Answer the question (1-5).
Y (Salary in '000 Dollars) X1 (Years of post-high school X2(Years of Experience)
Education)
30 4 10
20 3 8
36 6 11
24 4 9
40 8 12
ƩY = 150 Ʃ X1 = 25 Ʃ X2 = 50

1. Find the value of constant term?

A) -23.75 D) 3.75
B) 5.5 E) None
C) -2.25
2. What is the value for the coefficient of X2?
A) 6.6
B) 5.5
C) 4.5
D) 0.5
E) None
3. What is the value for the coefficient of X1?
A) 2.09
B) -2.56
C) -0.25
D) -5.5
E) None
4. What is the value of coefficient of determination?
A) 0.9732
B) 0.9945
C) 0.8564
D) 0.9215
E) None

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5. Based on the above given data test β1 = 0 at the 5% level of significance. Conclusion
yields
A) We reject the null
B) We fail to reject the null
C) We reject the Alternative
D) None
6. If F-calculated > F-tabulated, then RRSS (is significantly) > URSS; thus
A) We accept the null
B) We reject the Alternative
C) We reject the null
D) None
7. In the k-variable case, the main diagonal elements in the simple correlation matrix are
all : (a) Zero. (b) One (c) Less than One. (d) More than one.

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 Chapter 5:Econometrics Problem/Violation of CLRM Assumptions
Heteroscedasticity
1. The violation of the assumption of constant variance of the residual is known as
A) Heteroscedasticity
B) Homoscedasticity
C) Both a and b are correct
D) Both a and b are wrong
2) Homoscedasticity means
A) Constant variance
B) Minimum variance
C) Maximum variance
D) Zero variance
3) What would be then consequences for the OLS estimator if heteroscedasticity is
present in a regression model but ignored?
A) It will be ignored
B) It will be inconsistent
C) It will be inefficient
D) All are true.
4) Which of the following is not a formal method of detecting hetroscedasticity ?
A) Spearman's rank correlation test.
B) P ark test.
C) Glejser test
D) Durbin's m test.
5) Heteroscedasticity is more likely a problem of
A) Cross-section data
B) Time series data
C) Pooled data
D) All of the above
6) The coefficients estimated in the presence of heteroscedasticity are NOT
A) Unbiased estimators
B) Consistent estimators
C) Efficient estimators

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 D) Linear estimators
7) Even if heteroscedasticity is suspected and detected, it is not easy to correct the
problem. This statement is A) True B) False C) Sometimes true D) Depends on test
statistics
8) Which of the following is NOT considered the assumption about the pattern of
heteroscedasticity
A) The error variance is proportional to Xi
B) The error variance is proportional to Yi
C) The error variance is proportional to Xi2
D) The error variance is proportional to the square of the mean value of Y
9) Heteroscedasticity may arise due to various reasons. Which one of these is NOT a
reason
A) Extremely low or high values of X and Y coordinates in the dataset
B) Correlation of variables over time
C) Incorrect specification of the functional form of the model
D) Incorrect transformation of variables
10) The problem of hetroscedasticity was expressed as….. a) E(Ui)2 = σi2 b) E(Ui)2 = σ
2 c) E(Ui)2 = 0 d) E(Ui) = 0
11) What is the meaning of the term 'heteroscedasticity'?
A) The variance of the errors is not constant
B) The variance of the dependent variable is not constant
C) The errors are not linearly independent of one another
D) The errors have non-zero mean.
12) Which of the following pair is not correctly matched?
A) Durbin’s h test – Autocorrelation in autoregressive models
B) Dicky- Fuller test – Hetroscedasticity
C) F test – Overall significance of the regression model
D) Distributed lag models – Koyck approach
13) WLS is used to correct for:
A) Multicollinearity
B) Autocorrelation
C) Hetroscedasticity

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 D) Correlation
14) What is the meaning of the term "heteroscedasticity"?
A) The variance of the errors is not constant
B) The variance of the dependent variable is not constant
C) The errors are not linearly independent of one another
D) The errors have non-zero mean
15) Park Test is used for what purpose?
A) Detecting Hetroscedasticity
B) Solving Hetroscedasticity
C) Detecting Multi-collinearity
D) Solving Multi-collinearity
multicollinearity
1) If there exist high multicollinearity, then the regression coefficients are,
A) Determinate
B) Indeterminate
C) Infinite values
D) Small negative values
2) If multicollinearity is perfect in a regression model then the regression coefficients of
the explanatory variables are
A) Determinate
B) Indeterminate
C) Infinite values
D) Small negative values
3) Multicollinearity is used to denote,
A) The presence of linear relationships among explanatory variables
B) The presence of non-linear relationships among explanatory variables
C) The presence of linear relationships among dependent variables
D) The presence of linear relationships among endogenous variables
4) Near multicollinearity occurs when
A) Two or more explanatory variables are perfectly correlated with one another
B) The explanatory variables are highly correlated with the error term
C) The explanatory variables are highly correlated with the dependent variable

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 D) Two or more explanatory variables are highly correlated with one another
5) Which one of the following is NOT a plausible remedy for near multicollinearity?
A) Use principal components analysis
B) Drop one of the collinear variables
C) Use a longer run of data
D) Take logarithems of each of the variables
6) What will be the properties of the OLS estimator in the presence of multicollinearity?
A) It will be consistent unbiased and efficient
B) It will be consistent and unbiased but not efficient
C) It will be consistent but not unbiased
D) It will not be consistent
7) Which of the following is a multi-collinearity diagnostic?
A) Condition Index
B) Park test
C) Glejser tes
D) Durbin's m test.
8) Variance Inflation Factor is used for…
A) Detecting Hetroscedasticity
B) Solving Hetroscedasticity
C) Detecting Multi-collinearity
D) Solving Multi-collinearity
9) Partial correlations are useful indicator of:
A) Multicollinearity
B) Autocorrelation
C) Hetroscedasticity
D) Normality
10) When one or more of the regressors are linear combinations of the other regressors, it
is called
A) Autocorrelation
B) Heteroscedastity
C) Multicollinearity
D) Serial correlation.

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11) As a rule of thumb, a variable is said to be highly collinear if the Variance Inflation
Factor (VIF) is
A) Exactly 10
B) Exceeds 10
C) Less than 10
D) None of the above.
12) If multicollinearity is perfect in a regression model the standard errors of the
regression coefficients are
A) Determinate
B) Indeterminate
C) Infinite values
D) Small negative values
13) In a regression model with multicollinearity being very high, the estimators
A) Are unbiased
B) Are consistent
C) Standard errors are correctly estimated
D) All of the above
14) Multicollinearity is essentially a
A) Sample phenomenon
B) Population phenomenon
C) Both a and b
D) Either a or b
15) Which of the following statements is NOT TRUE about a regression model in the
presence of multicol-linearity
A) t- ratio of coefficients tends to be significantly
B) R2 is high
C) OLS estimators are not BLUE
D) OLS estimators are sensitive to small changes in the data
16) Which of these is NOT a symptom of multicollinearity in a regression model
A) High R2 with few significant t ratios for coefficients
B) High pair-wise correlations among regressors
C) High R2 and all partial correlation among regressors

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 D) VIF of a variable is below 10
17) A sure way of removing multicollinearity from the model is to
A) Work with panel data
B) Drop variables that cause multicollinearity in the first place
C) Ransform the variables by first differencing them
D) Obtaining additional sample data
18) Assumption of 'No multicollinearity' means the correlation between the regressand
and regressor is a. High b. Low C. Zero d. Any of the above
19) Multicollinearity is limited to
A) Cross-section data
B) Time series data
C) Pooled data
D) All of the above
20) As a remedy to multicollinearity, doing this may lead to specification bias
A) Transforming the variables
B) Adding new data
C) Dropping one of the collinear variables
D) First differencing the successive values of the variable
21) F test in most cases will reject the hypothesis that the partial slope coefifcients are
simultaneously equal to zero. This happens when
A) Multicollinearity is present
B) Multicollinearity is absent
C) Multicollinearity may be present OR may not be present
D) Depends on the F-value
Endogeniety
1. If covariance between explanatory variable and error term is not zero; the caused
econometrics problem is called?
A) Multicolinearity
B) Autocorrelation
C) Endogeniety
D) Heteroskedasticity

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Autocorrelation
1) Estimating the coefficients of regression model in the presence of autocorrelation leads
to this test being NOT valid
A) t- test
B) F test
C) Chi-square test
D) All of the above
2) Spatial autocorrelation is
A) The error term pertaining to one household or firm is correlated with the
error term of another household or firm through space
B) The dependent variable pertaining to one household or firm is correlated with the
error term of another household or firm through space
C) The independent variable pertaining to one household or firm is correlated with
the error term of another household or firm through space
D) Both a and c
3) The regression coefficient estimated in the presence of autocorrelation in the sample
data are NOT
A) Unbiased estimators
B) Consistent estimators
C) Efficient estimators
D) Linear estimators
4) If the value of Durbin-Watson’s d stastic = 0, there is.....
A) No Auto-correlation
B) Positive Auto-correlation
C) Negative Auto-correlation
D) None of these
5) If the value of Durbin-Watson’s d stastics = 2, the value of Co-efficient of
autocorrelation is….. a) One b) Zero c) Two d) More than Two
6) E (Ui,Uj) ≠ 0, when i≠j is termed as, a) Hetroscedasticity b) Multi-collinearity c)
Auto-Correlation d) Homoscedasticity
Others Econometrics Problems (Specification, Normality, Statistical Error)
1) Which one of the following is not an example of mis-specification of functional form

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 A) Using a linear specification when a double logarithmic model would be more
appropriate
B) Modelling as a function of 1 when in fact it is scaled as a function of x square
C) Modelling Y as a function of X when in fact it scales as a function of 1 by X
D) Excluding a relevant variable from a linear regression model
2) Dropping a variable from a model may lead to what is called
A) Specification error
B) Sampling error
C) Measurement error
D) Standard error.
3) Rejecting a true hypothesis results in this type of error
A) Type I error
B) Type II error
C) Structural error
D) Hypothesis error
4) Accepting a false hypothesis results in this type of error
A) Type I error
B) Type II error
C) Structural error
D) Hypothesis error
5. Type I error is:
A) Failing to reject null hypothesis when it is false
B) Rejecting the null hypothesis when it is true
C) Rejecting the null hypothesis when it is false
D) None of the above
6. Which one of the following is NOT an example of mis- specification of functional
form?
A) Using a linear specification when y scales as a function of the squares of x
B) Using a linear specification when a double-logarathimic model would be more
appropriate
C) Modelling y as a function of x when in fact it scales as a function of 1/x
D) Excluding a relevant variable from a linear regression model

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7) If the residuals from a regression estimated using a small sample of data are not
normally distributed, which one of the following consequences may arise?
A) The coefficient estimate will be unbiased inconsistent
B) The coefficient estimate will be biased consistent
C) The coefficient estimate will be biased inconsistent
D) Test statistics concerning the parameter will not follow their assumed
distributions
8) Which of the following is used to detect specification errors?
A) The Park test
B) Ramsey's RESET test
C) Chow test
D) The Runs test.
9) The Runs test used to detect autocorrelation is
A) Parametric t est
B) Non-parametric test
C) Equivalent test
D) Hypothesis test.
10) When a linear function is fitted to non-linear data set it will result in?
A) Specification error
B) Sampling error
C) Measurement error
D) None of the above.
11) Specification bias or specification error means
A) Leaving out important explanatory variables
B) Including unnecessary variables
C) Choosing the wrong functional form between Y and X variables
D) All of the above
12) The Structural break in a data set is tested by
A) Runs test
B) Lagrange multiplier test
C) Chow test
D) Von-Neumann ratio test.

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13) The test to find out whether the error term follows a normal distribution is the
A) F-test
B) Error test
C) Normality test
D) t - test.
14) For a symmetric distribution, Skewness is,
a) 1 b) 0 c) 3 d) 2
Question in others forms rather than choice
1. _____ is occurs when one (or more) of the regressors in a model is a linear function
of other/s.
2. A statistic commonly used for detecting multi-collinearity is ____________________
3. ___ is present if var(εi) = σi2 ≠ σ2: different variances for different segments of the
population (segments by the values of the X's).
4. _____is requires that the variance of the unobserved error u does not depend on the
levels of education, experience, or tenure.
Chapter 6: Non-Linear and Time series
1) In Linear Probability Model, the:
A) Regressand is dichotomous
B) Regressand is ordinal variable
C) Regressor is dichotomous
D) Regressor is ordinal
2) The distribution underlying the probit model is:
A) Normal distribution
B) Logistic distribution
C) Chi-square
D) F distribution
3) Regressionn models containing a mixture of quantitative and qualitative variables are
called
A) ANOV A models
B) ANCOVA models
C) Parallel regressions
D) Coincident regressions.

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4) The likelihood ratio test is related to:
A) Maximum likelihood method
B) Ordinary least squares method
C) Likelihood method
D) Generalised least squares method.
5) Which of the following models is used to regress on dummy dependent variable?
A) The LPM model
B) The Probit model.
C) The Logit model
D) All of the above.
6) In a semi-log model of type log Yi = βXi the co-efficient β stands for the
A) Slope
B) Slope and Elasticity
C) Elasticity
D) Growth rate.
7) If the mean and variance of time series do not vary systematically overtime it is called
A) Stationary
B) Random
C) Non- Stationary
D) Non-Random.
8) In the model ΔY = βΔX, the parameter β stands for the
A) Slope
B) Slope and Elasticity
C) Elasticity
D) Growth rate.
9) Information about numerical values of variables from period to period is
A) Time series data
B) Cross-section data
C) Pooled data
D) Panel data
10) There are several reasons for serial correlation to occur in a sample data. Which of
these is NOT?

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 A) Business cycle
B) Specification bias
C) Manipulation of data
D) Stationary data series
11) When supply of a commodity, for example agricultural commodities, react to price
with a lag of one time period due to gestation period in production, such a phenomenon is
referred to as
A) Lag phenomenon
B) Cobweb phenomenon
C) Inertia
D) Business cycle
12) If in our regression model, one of the explanatory variables included is the lagged
value of the dependent variable, then the model is referred to as
A) Best fit model
B) Dynamic model
C) Autoregressive model
D) First-difference form
13) A time series sample data is considered stationary if the following characteristics of
the series are time invariant
A) Mean
B) Variance
C) Covariance
D) All of the above
14) By autocorrelation we mean
A) That the residuals of a regression model are not independent
B) That the residuals of a regression model are related with one or more of the
regressors
C) That the squared residuals of a regression model are not equally spread
D) That the variance of the residuals of a regression model is not constant for all
observations
15) Including relevant lagged values of the dependent variable on the right hand side of a
regression equation could lead to which one of the following?

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 A) Biased but consistent coefficient estimate
B) Biased and inconsistent coefficient estimate
C) Unbiased but inconsistent coefficient estimate
D) Unbiased and consistent but inefficient coefficient estimate
16) Plotting the residuals against time is termed as the
A) Time sequence plot
B) Box plot
C) Scatter plot
D) Stem and leaf plot.
17. Constructing artificial variables that take on values of 1 or 0, 0 indicating the absence
of an attribute and 1 indicating the presence (or possession) of that attribute. Alternative
name is?
A) Binary variables D) All
B) Dichotomous variables F) None
C) Categorical variables
18. In the dummy variable the classification that is assigned the value of 0 is often
referred as?
A) Benchmark C) Omitted category
B) Control D) All
19. The cumulative logistic function for Logit model is based on the concept of
A) An odds ratio
B) VIF
C) R2
D) Forecasting
E) None
20. When the independent variable to be measure is dichotomous, which one is false?
A) There is a problem of using the conventional R 2 as a measure of goodness of fit.
B) Measures based on likelihood ratios.
C) R 2 Can be used as a measure of goodness of fit.
D) All
21. In certain applications, the dependent variable is continuous, but its range may be
constrained. Then which model can be applicable for this

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 A) Tobit
B) Probit
C) Logit
D) All
E) None
22. Which one is interpreted in Tobit Model?
A) Coefficient
B) Odds Ratio
C) Marginal Effect
D) All
23. Which are a data-classifying device in that they divide a sample into various
subgroups based on qualities or attributes
A) Dummy variables
B) Continues Variable
C) Regressand Variable
D) Dependent Variable
E) None
24. The general tendency of a time series to increase, decrease or stagnate over a long
period of time is termed as?
A) Secular Trend C) Irregular components
B) Seasonal D) Cyclical
25. In regression analysis involving time series data, if the regression model includes not
only the current but also the lagged values of the explanatory variables it is called
A) Autoregressive
B) Constant large model
C) Distributed large models
D) Distributed small models
26. Which one is the reason why lags may occur?
A) Psychological reasons
B) Technological reason
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 C) Institutional reasons
D) All
27. All are special type of simultaneous equations model except
called, or,
A) Recursive model
B) OLS
C) Triangular model
D) Causal model

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28. Which one is not Advantage of Panel Data?
A) Less multicollinearity
B) More degrees of freedom
C) Minimise the effects of aggregation bias
D) Panel attrition
E) None
29. Panel data controls for two kinds of z-variables these are
A) Individual-specific time-constant z-variables
B) Individual-vary time-constant z-variables
C) Individual-constant time-varying z-variables
D) A and C
30. Which one is not limitation of panel data?
A) Serial correlation
B) Poolability
C) Non-stationary (for “small time series” data)
D) Heteroskedasticity
E) All