1. The greater the standard error of an estimated coefficient: a. the greater th
ID: 1166450 • Letter: 1
Question
1. The greater the standard error of an estimated coefficient:
a. the greater the t-value of the estimated coefficient.
b. the lower the t-value of the estimated coefficient.
c. the greater the R-square.
d. the greater the adjusted R-square.
2. As a general rule of thumb, a manager can be 95 percent confident that the true value of the underlying parameter in the regression is not zero, when the absolute value of the t-statistic is:
a. greater than zero.
b. greater than or equal to 2.
c. None of the statements is correct.
d. greater than or equal to 1.
3. A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: ln M = 14.666 + .021 ln C ? 0.036 ln r, where M denotes real money balances, C is an index of consumer confidence, and r is the interest rate paid on bank deposits. Based on this study we know that the interest elasticity is:
very elastic.
zero.
very inelastic.
unitary
4. Which of the following can be used to quantify the overall statistical significance of a regression?
a.F-statistic
b.t-statistic
c.The F-statistic and R-square
d.R-square
5.
Which of the following is used to determine the statistical significance of a regression coefficient?
a. R-square
b. Adjusted R-square
c. t-statistic
d. F-statistic
Explanation / Answer
1) b is correct
t statistic= coefficient / standard error
Higher the standard error lower is the t statistic.
2) b is correct
For a coefficient to be statistically significant its t value needs to be greater than or equal to 2 for 95% confidence.
3) very inelastic is correct
The coefficients in the ln-ln model give elasticity value. Coefficient of r is 0.036 which is less than 1 which implies it is inelastic.
4) a is correct
F statistic is used to determine overall significance of all the variables in the model.
5) c is correct
t statistic is used to determine individual significance of the variable.
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