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Economics
Econometrics
BSTA QUIZ 6
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Terms in this set (10)
These Rules must be adhered to in selecting a model
Keep k<n/10
Include all variables that your theory tells you are necessary
Include all variables you want to test
Include variables that are stat. significant
All
All of the Above
In model selection, which will never satisfy the selection criterion
Lowest Adjusted R^2
Lowest Malow's Cp
Lowest Akaike Information Criterion (AIC)
None
Lowest Adjusted R^2
T/F
In backwards selection, you start with the full model and add insignificant variables
False
T/F
For stepwise regression, the p-value corresponding to the f statistics is the criterion used to determine if a variable should be added or deleted. The cut-off point of p-value is always kept constant at 0.05
False
T/F
In backwards stepwise model selection, if null hypothesis is rejected, then the variable in question is non-important and discarded
False
T/F
For a multiple linear regression model, if the correlation coefficient between dependent variable Y and all independent variables is 0.74, it can be concluded that the regression model explains 74% of variability in Y
False
Common mistakes in model selection include the following except
not verifying that the relationship is liner
rely on automated results without visual verification
high R2 is necessary but not sufficient for a good model
none above
none above
T/F
Increasing the number of predictors for a linear regression model makes the model better suited for inferences
False
The following are important steps in the stepwise method of model selection except
First step is to find the variable with the largest partial F statistic value (or t-stat value) and test for Hnull; betak=0
If the null hypothesis is accepted, and then the variable in question is judged important and kept
Next each of the remaining variables is added (separately) to the regression model that already has the first independent variable
The variable with the highest partial F statistical value is added. Now we have a two-variable method
If the null hypothesis is accepted, and then the variable in question is judged important and kept
Which is not a model selection method?
Forward
Backward
Stepwise
None
None, they are all methods
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Verified questions
QUESTION
Suppose Austin and Ally are the only soccer enthusiasts in a village where any number of public soccer clinics could be put on by visiting experts for $80 each. There are no external costs involved. Austin's marginal private benefit curve for soccer clinics is horizontal at$60. Ally's marginal private benefit curve is a straight line starting at $100 on the vertical axis and ending at 10 clinics on the horizontal axis. Draw a correctly labeled graph for soccer clinics showing the marginal social cost, the marginal social benefit, and each resident's marginal private benefit. Label the quantity of clinics that Austin would purchase if he were the only resident as$ $Q_{Austin}$ $Label the quantity of clinics that Ally would purchase if she were the only resident as$ $Q_{Ally}$ $Label the optimal quantity of clinics for society as$ $Q_{Optimal}$$
ECONOMICS
Suppose the nominal gross domestic product of Germany was 3,420 billion euros in 2007 and 3,560 billion euros in 2008. Between the same years, the German CPI increased from 120.0 to 122.4. What was the real growth in Germany’s real GDP in this time period?
ECONOMICS
The following hypothesis-testing situation is given: $$ H_0:π≤.50 $$ and $$ H_1:π>.50 $$ The significance level is .10, and the sample size is 12. a. What is the decision rule? b. There were nine successes. What is your decision regarding the null hypothesis? Explain.
ECONOMICS
What is diversification? Does a stockholder get a greater benefit from diversification going from 1 to 10 stocks or going from 100 to 120 stocks?