MCQs Econometrics 3

This quiz is about Econometrics, which covers the topics of Regression analysis, correlation, dummy variable, multicollinearity, heteroscedasticity, autocorrelation, and many other topics. Let’s start with MCQs Econometrics test

MCQs about Multicollinearity, Dummy Variable, Selection of Variables, Error in Variables, Autocorrelation, Time Series, Heteroscedasticity, Simultaneous Equations, and Regression analysis

1. Zero tolerance or VIF equal to one indicate

 Low multicollinearity

 High autocorrelation

 Perfect multicollinearity

 No multicollinearity

2. The log transformation is _____________ if some of the $Y$ and $X$ values are zero or negative.

 None of these options

 Not applicable

 Sometimes can be done

 Applicable

3. In case of perfect multicollinearity, the $X’X$ is a ____________

 Identify matrix

 Singular matrix

 Symmetric matrix

 None of these options

4. Durbin and Watson have suggested a test to detect the presence of autocorrelation which is applicable to

 Large samples

 None of these options

 Population

 Small samples

5. Which combination of regressors might lead to perfect collinearity?

 The currency exchange rate at the beginning of the day and currency exchange rate at the end of the day

 The age of a worker and his working experience in years

 Age, salary, and work experience as regressors

 Salary and log of salary included in the model

6. In case of perfect or near to perfect multicollinearity, the OLS estimates are

 Not unique

 None of these options

 Unique

 Same

7. An assumption about underlying the d statistics “The explanatory variable $X$’s are non-stochastic or fixed in ____________”

 Repeated sampling

 None of these options

 Simple random sampling

 Cluster sampling

8. In case of perfect multicollinearity, the OLS estimates are

 Unique

 Unexceptional

 None of these options

 Not unique

9. Glejser test is similar to ________

 Park test

 None of these options

 White test of heteroscedasticity

 Spearman’s Rank Correlation test

10. A system which has an infinite number of solutions has _______

 An equal number of variables and equations

 Fewer variables than equations

 None of these

 More variables than equations

11. If the calculated value of tolerance is 1, then there is an issue of

 Low multicollinearity

 Perfect multicollinearity

 Autocorrelation

 No multicollinearity

12. If $d*<d_l$ then we

 Reject $H_0$ of no autocorrelation

 Accept $H_0$ of no autocorrelation

 Problem of heteroscedasticity

 Problem of collinearity

13. If $\rho$ is zero, then there is

 Collinearity

 Greater Positive Autocorrelation

 The very high degree of negative autocorrelation

 No autocorrelation

14. The rule of thumb is if k is between 100 and 1000 then there is ____________ multicollinearity?

 There is strong multicollinearity

 Moderate to strong

 None of these options

 There is no multicollinearity

15. The existence of a perfect or near to exact linear relationship among some or all explanatory variables of a regression model is called

 Error in Variable

 Multicollinearity

 Autocorrelation

 Heteroscedasticity

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An application of different statistical methods applied to the economic data used to find empirical relationships between economic data is called Econometrics.

Econometrics means “Economic Measurement”. Econometrics is the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of statistical inference.

Econometrics can also be defined as the empirical determination of economic laws. Econometrics can be classified as (i) Theoretical Econometrics and (ii) Applied Econometrics.

(i) Theoretical Econometrics

Theoretical econometrics is concerned with developing appropriate methods for measuring economic relationships specified by econometric models. Theoretical econometrics leans heavily on mathematical statistics and must spell out the assumptions of methods (such as Least Squares), their properties, and what happens to these properties when one or more of the assumptions of the technique are not fulfilled.

(ii) Applied Econometrics

In applied econometrics, the tools of theoretical econometrics are used to study special fields(s) such as production function, investment function, demand and supply function, portfolio theory, etc.

Types of Econometrics Data

Different type of data is used in Econometrics. There are three important types of data for empirical analysis:

• Time Series Data
  A time series data is a set of observations on the values that a variable takes at different times. The time series data may be collected at regular time intervals such as daily, weekly, monthly, quarterly, annually, etc.
• Cross-Sectional Data
  Cross-sectional data are data on one or more variables collected at the same point in time. Cross-sectional data has a problem of heterogeneity.
• Pooled Data
  Pooled data is a combination of both time series and cross-sectional data.

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