Econ quiz 2

Question 1

What is the SRF?

Answer 1

Sample Regression Function

Question 2

What is the purpose of the SRF?

Answer 2

to pay compensation to shareholders or creditors who incurred greater losses than under normal insolvency proceedings

Question 3

What does OLS mean?

Answer 3

Ordinary Least Squares

Question 4

What is the purpose of OLS

Answer 4

Used for regression analysis, since we don’t have unlimited time, we must take shortcuts to this trial-and-error process

Question 5

Regression Line properties: what is the mean value of the residuals?

Answer 5

0

Question 6

What is the objective of OLS?

Answer 6

Obtain parameters, draw inferences about the true parameters

Question 7

Assumptions of Xi

Answer 7

1. Must be fixed/independent of error term

Question 8

The variance of the error, or disturbance, term is the (same/different) regardless of the value of Xi

Answer 8

Same

Question 9

Given any two X values, Xi and Xj, the correlaation between any two ui and uj is (1 or 0)?

Answer 9

0

Question 10

If you have only the first pair of observations on Y and X, is it possible to estimate the two unknown parameters? (yes/no)

Answer 10

NO, because you need a spread of data to set parameters