303 Exam

DEPARTMENT OF ECONOMICS UNIVERSITY OF VICTORIA ECON 345: Applied Econometrics Summer 2010 MIDTERM EXAM - Solutions

Duration: 60 minutes INSTRUCTIONS:

Total Marks: 50 marks

1. This exam contains a total of 6 pages; 5 pages of exam AND 1 page for a statistical table. Please count the number of pages in this examination paper before beginning to write, and report any discrepancy IMMEDIATELY to an invigilator 2. Answer ALL questions in the booklets provided. 3. EXCEPT for a single sheet of 8.5x11 paper (with notes allowed on both sides), all notes, papers, and electronic devices other than non-programmable calculators must be put away. Please turn off any device that could make a noise. 4. Please have your Student ID out on your desk for invigilators to inspect. ________________________________________________________________________

SECTION 1: Multiple Choice Questions (Total marks: 5) Choose the correct answer for each question and record it in the booklet provided. NO explanation is required. CLEARLY record your answer (i.e. A, B, C or D); if I cannot read your writing I will not be able to mark it. 1. In cross-sectional analysis, the Classical Linear Model (CLM) assumptions state that: A. The errors must have a constant variance and be normally distributed. B. The errors must be normally distributed and correlated with the explanatory variables. C. The model must be linear in the explanatory variables and the errors must be normally distributed. D. None of the above.

ECON345, Midterm Exam, Solutions 2 Summer 2010

2. Consider the following population model, . Suppose we had a sample of data and we use this data to obtain the following estimated regression, . If we want to test the hypothesis that has no effect on , then our null hypothesis would be: A. B. C. D. None of the above 3. The coefficient of determination, , tells us:

A. The amount of variation in the dependent variable that is explained by the disturbance term. B. The amount of...