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Econometric Criteria
Statistical Criteria
Hodge Podge I
Estimated Coeficents
Economic Criteria
100
Name at least two alternatives you could use if you get the wrong signs on a model due to multicolinearity
Drop Variables Impose Restrictions Transform Data Increase Sample Size
100
What is another name for the r-squared?
Coeficent of determination
100
Parallel shfits are due to changes in coefs or due to changes in demand shifters?
Changes in demand shifters cause parallel shifts, changes in coef' cause a structural change.
100
Assume you have estimated an ordinary demand model for sirloin steak where steak is expressed in pounds, you obtain a coef. on the price variable of -3 interpret the price coef in a sentence
For every one unit increase in the price of sirloin steak q demanded decreases by 3 pounds
100
What is the expected sign on a subsitute good in an ordinary demand equation
You should expect a positive sign
200
Name one type of pattern that occurs in the error terms of a model
cycle, trand, none
200
Interpret an R-squared figure of .87 in a sentence, assume you estimated demand for Russet Potatoes
87 percent of variation in potato demand is explained by the model
200
What does CPI stand for?
Consumer Price Index
200
Assume you estimate ordinary demand for T-bone steak and use price of Sirloin steak as a substitute good. You estimate a coef. of 5 on the sirloin steak variable. Interpret the Sirloin steak coeficient in a sentence remeber price of sirloin is expressed in dollars quantity of T-bone is expressed in pounds .
For every one dollar increase in the price of sirloin steak demand for T-bone steak increases by 5 pounds
200
What is the expected sign on a complement good in an inverse demand equation
Positive
300
Name the 3 biggest problems with regard to econometric criteria
Error Term, specification errors, multicollinearity
300
If you have a high R-Squared are you good to go or should you look at other criteria? what is a good follow up question to the R-squared?
How many variables are statistically significant?
300
What is the formula for converting nominal $ to real $
(Nominal/CPI)=Real
300
Assume you estimate ordinary demand for red potatoes a normal good and obtain a coef on the Income variable of 3. Potatoes is expressed in pounds income is expressed in dollars.
For every one dollar increase in income quantity of potatoes increases by 3 pounds
300
What is the expected sign on a substitute good in an inverse demand equation
negative sign
400
Name two consequences of multicollinearity
Wrong Sign Bad coeficient
400
Assume you obtain a t-stat of 1.73 and you are using a 10% significance level cut off value of 1.65 what is your conclusion
Reject the null hypothesis-the coef. is statistically significant
400
What is the formula for calculating a T-statistic?
T-stat =(coef./standard error)
400
Q=a-BP What does a in this equation represent?
The intercept
400
If you get a negative sign on the income variable what type of good is it normal or inferior
inferior
500
True or false-- including irrelevant variables in a model is an example of a specification error
True
500
True or False A type I error is when an incorrect null is accepted
False A type II error is when an incorrect null is accepted
500
Demand for an input to production is what type of demand?
Derived demand
500
What is the definition of the intercept?
It is the value of the dependent variable if all of the explanatory variables are 0
500
What is the most important concept that drive the whole economic system?
Consumer is King