,Chapter 1
1. Econometrics is the branch of economics that _____.
a. studies the behavior of individual economic agents in making economic decisions
b. develops and uses statistical methods for estimating economic relationships
c. deals with the performance, structure, behavior, and decision-making of an economy as a whole
d. applies mathematical methods to represent economic theories and solve economic problems.
Answer: b
Difficulty: Easy
Bloom’s: Knowledge
A-Head: What is Econometrics?
BUSPROG:
Feedback: Econometrics is the branch of economics that develops and uses statistical methods for
estimating economic relationships.
2. Nonexperimental data is called _____.
a. cross-sectional data
b. time series data
c. observational data
d. panel data
Answer: b
Difficulty: Easy
Bloom’s: Knowledge
A-Head: What is Econometrics?
BUSPROG:
Feedback:
3. Which of the following is true of experimental data?
a. Experimental data are collected in laboratory environments in the natural sciences.
b. Experimental data cannot be collected in a controlled environment.
c. Experimental data is sometimes called observational data.
d. Experimental data is sometimes called retrospective data.
Answer: a
Difficulty: Easy
Bloom’s: Knowledge
A-Head: What is Econometrics?
BUSPROG:
Feedback:
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
,4. An empirical analysis relies on _____to test a theory.
a. common sense
b. ethical considerations
c. data
d. customs and conventions
Answer: c
Difficulty: Easy
Bloom’s: Knowledge
A-Head: Steps in Empirical Economic Analysis
BUSPROG:
Feedback: An empirical analysis relies on data to test a theory.
5. The term ‘u’ in an econometric model is usually referred to as the _____.
a. error term
b. parameter
c. hypothesis
d. dependent variable
Answer: a
Difficulty: Easy
Bloom’s: Knowledge
A-Head: Steps in Empirical Economic Analysis
BUSPROG:
Feedback: The term u in an econometric model is called the error term or disturbance term.
6. The parameters of an econometric model _____.
a. include all unobserved factors affecting the variable being studied
b. describe the strength of the relationship between the variable under study and the factors affecting it
c. refer to the explanatory variables included in the model
d. refer to the predictions that can be made using the model
Answer: b
Difficulty: Easy
Bloom’s: Knowledge
A-Head: Steps in Empirical Economic Analysis
BUSPROG:
Feedback: The parameters of an econometric model describe the direction and strength of the
relationship between the variable under study and the factors affecting it.
7. Which of the following is the first step in empirical economic analysis?
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
, a. Collection of data
b. Statement of hypotheses
c. Specification of an econometric model
d. Testing of hypotheses
Answer: c
Difficulty: Easy
Bloom’s: Knowledge
A-Head: Steps in Empirical Economic Analysis
BUSPROG:
Feedback: The first step in empirical economic analysis is the specification of the econometric model.
8. A data set that consists of a sample of individuals, households, firms, cities, states, countries, or a
variety of other units, taken at a given point in time, is called a(n) _____.
a. cross-sectional data set
b. longitudinal data set
c. time series data set
d. experimental data set
Answer: a
Difficulty: Easy
Bloom’s: Knowledge
A-Head: The Structure of Economic Data
BUSPROG:
Feedback: A data set that consists of a sample of individuals, households, firms, cities, states, countries,
or a variety of other units, taken at a given point in time, is called a cross-sectional data set.
9. Data on the income of law graduates collected at different times during the same year is_____.
a. panel data
b. experimental data
c. time series data
d. cross-sectional data
Answer: d
Difficulty: Easy
Bloom’s: Application
A-Head: The Structure of Economic Data
BUSPROG: Analytic
Feedback: A data set that consists of a sample of individuals, households, firms, cities, states, countries,
or a variety of other units, taken at a given point in time, is called a cross-sectional data set. Therefore,
data on the income of law graduates on a particular year are examples of cross-sectional data.
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
