This is an practice final of the Econometrics Class.

Question

David · Accepted Answer

1. Which of the following produces bias in the OLS estimator? 
a. heteroskedasic errors. 
2. Which of the following variables could be used as an instrument for the price of gasoline 
in estimating the demand for gasoline? 
b. population density in market 
3. Which of the following procedures produces the OLS estimator for β1 in the 
equation Y =β 1X1 + β2X2 + ui? 
            a. regress X2 on X1 and then regress Y on the residuals from this firstrst 
regression.
4.  Which of the following is a consequence of heteroskedastic errors in the linear 
         regression model? (circle all correct options) 
  a. the formula for the standard errors needs to be corrected (i.e., we need  
 to use the robust) option in Stata 
 b. the OLS estimator is biased but consistent 
 c. the OLS estimator is no longer the most efficient among linear unbiased 
 estimators 
c. the independent variable is endogenous(all are correct) 
 
Some more short questions 
1. We use t-test for that. 
H[0]: coefficient for log(price)=1 
H[1]:

This is an practice final of the Econometrics Class.

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