Deck 3: Multiple Regression Analysis: Estimation

Question 1

The term "linear" in a multiple linear regression model means that the equation is linear in parameters.

Answer 1

True

Question 2

Which of the following is true of R²?

A)R² is also called the standard error of regression.
B)A low R² indicates that the Ordinary Least Squares line fits the data well.
C)R² usually decreases with an increase in the number of independent variables in a regression.
D)R² shows what percentage of the total variation in the dependent variable,Y,is explained by the explanatory variables.

Answer 2

D

Question 3

High (but not perfect)correlation between two or more independent variables is called _____.

A)heteroskedasticty
B)homoskedasticty
C)multicollinearity
D)micronumerosity

Answer 3

C

Question 4

Suppose the variable x₂ has been omitted from the following regression equation, . is the estimator obtained when x₂ is omitted from the equation.If E( )>β₁, is said to _____.

A)have an upward bias
B)have a downward bias
C)be unbiased
D)be biased toward zero

Question 5

Consider the following regression equation: .What does β₁ imply?

A) measures the ceteris paribus effect of on
.
B) measures the ceteris paribus effect of on
.
C) measures the ceteris paribus effect of on
.
D) measures the ceteris paribus effect of on
.

Question 6

The Gauss-Markov theorem will not hold if _____.

A)the error term has the same variance given any values of the explanatory variables
B)the error term has an expected value of zero given any values of the independent variables
C)the independent variables have exact linear relationships among them
D)the regression model relies on the method of random sampling for collection of data

Question 7

A larger error variance makes it difficult to estimate the partial effect of any of the independent variables on the dependent variable.

Question 8

The term _____ refers to the problem of small sample size.

A)micronumerosity
B)multicollinearity
C)homoskedasticity
D)heteroskedasticity

Question 9

Exclusion of a relevant variable from a multiple linear regression model leads to the problem of _____.

A)misspecification of the model
B)multicollinearity
C)perfect collinearity
D)homoskedasticity

Question 10

The value of R² always _____.

A)lies below 0
B)lies above 1
C)lies between 0 and 1
D)lies between 1 and 1.5

Question 11

If an independent variable in a multiple linear regression model is an exact linear combination of other independent variables,the model suffers from the problem of _____.

A)perfect collinearity
B)homoskedasticity
C)heteroskedasticty
D)omitted variable bias

Question 12

In the equation, , is a(n)_____.

A)independent variable
B)dependent variable
C)slope parameter
D)intercept parameter

Question 13

Suppose the variable x₂ has been omitted from the following regression equation, . is the estimator obtained when x₂ is omitted from the equation.The bias in is positive if _____.

A) >0 and x ₁ and x ₂ are positively correlated
B) <0 and x ₁ and x ₂ are positively correlated
C) >0 and x ₁ and x ₂ are negatively correlated
D) = 0 and x ₁ and x ₂ are negatively correlated

Question 14

Find the degrees of freedom in a regression model that has 10 observations and 7 independent variables.

A)17
B)2
C)3
D)4

Question 15

The coefficient of determination (R²)decreases when an independent variable is added to a multiple regression model.

Question 16

The assumption that there are no exact linear relationships among the independent variables in a multiple linear regression model fails if _____,where n is the sample size and k is the number of parameters.

A)n>2
B)n=k+1
C)n>k
D)n

Question 17

Suppose the variable x₂ has been omitted from the following regression equation, . is the estimator obtained when x₂ is omitted from the equation.The bias in is negative if _____.

A) >0 and x ₁ and x ₂ are positively correlated
B) <0 and x ₁ and x ₂ are positively correlated
C) =0 and x ₁ and x ₂ are negatively correlated
D) =0 and x ₁ and x ₂ are negatively correlated

Question 18

An explanatory variable is said to be exogenous if it is correlated with the error term.

Question 19

The key assumption for the general multiple regression model is that all factors in the unobserved error term be correlated with the explanatory variables.

Question 20

If the explained sum of squares is 35 and the total sum of squares is 49,what is the residual sum of squares?

A)10
B)12
C)18
D)14