Final Exam Study Guide

CHAPTER 4

Binary variables:
o Can take on only two values
In the simple linear regression model, the regression slope:
o Indicates by how many units Y increases, given one unit
increase in X.
The regression R2 is a measure of:
o The goodness-of-fit of your regression line
In the simple linear regression model: [Yi = 0+ 1 X i +ui ]
0+ 1 X i , Represents the population regression function
o
E (ui|Xi) =0 says that:
o The conditional distribution of the error given the
explanatory variable has a zero mean.

CHAPTER 5

How to calculate the t-statistic:

o Estimator minus its hypothesized value, divided by the
standard error of the estimator
CHAPTER 6

CHAPTER 7
CHAPTER 8
CHAPTER 10
CHAPTER 11
CHAPTER 12
CHAPTER 14
CHAPTER 15

CHAPTER 16

If Yt is I(2), then:
o 2Yt is stationary
A VAR with five variables, 4 lags and constant terms for each
equation will have a total of:
o 105 coefficients
The order of integration:
o Is the number of times that the series needs to be
differenced for it to be stationary
Not an appropriate way to tell whether two variables are
cointegrated:
o To see if the two variables are integrated of the same order