Question

1. Serial correlation, its implications on the OLS model. What is classical Assumption 4
   1. Error term has constant variance
   2. Error term is normally distributed
   3. All explanatory variables are un correlated with error term
   4. Different observations of error term are uncorrelated each other
2. Relationship between serial correlation and classical assumption 4.
   1. Serial violates classical assumption 4 always hold
   2. Serial violates support
   3. Serial violates is not related
   4. Serial violates is used to help when 4 violated
3. Assuming we are using an appropriate test in testing for serial correlation, What does it mean to reject the null hypothesis for a two-sided test
   1. Rejecting the null indicate that is serial correlation
   2. Rejecting the null indicate that result are inconclusive
   3. Rejecting the null indicate that no serial correlation
4. Assuming the same regression in previous question with Durbin Watson. Stat of 1.75 .

H_{0 :} P≤0, H_A : P≥0

What do the values of D_L and D_u imply for the calculate Durbin Waston 1.75 for 5 percent level of significance

1. Fail to reject the null hypothesis that is not heterosceclastcity.
2. Reject the null hypo + conclude some specification error
3. Fail to reject the null hypothesis
4. Positive serial correlation.

5. Current Poplulation survey Backgroun in the previous question what is critical value of F-stat at 1% level for this regression
   1. 2.6
   2. 3.02
   3. 2.37
   4. 3.32
6. It is a significance level of 1% use the F-stat to test for overall goodness of fit (34,53) what conclude?
   1. Mode does not fit the data
   2. Regression is insignificant
   3. Fail to reject the null
   4. Equation is statistically significant at 1% level
7. Based on 30 observation yields a Durbin Waston statistic of 1.75. what are the D_L and D_u for 5% one-sided level of significance
   1. 1.59 + 1.76
   2. 0.69 + 1.97
   3. 1.14 + 1.74
   4. 1.05 + 1.63
8. (Essay question)

Wage = B₀+B₁Age+B₂Race+B₃Exp+B₄occup

Wage = 12.546 + 0.939Age + 0.414Race – 0.833Exp + 0.170Occup

           (2.013)    (0.084)    (0.294)      (0.079)       (0.124)

Why have a problem both Age + Exp (0.124)

(Classical assumption might be violating) <- hint.

Answer 1

Answer:

• Serial correlation, its implications on the OLS model. What is classical Assumption 4

Different observations of error term are uncorrelated each other

• Relationship between serial correlation and classical assumption 4.

Serial violates classical assumption 4 always hold

• Assuming we are using an appropriate test in testing for serial correlation, What does it mean to reject the null hypothesis for a two-sided test

Rejecting the null indicate that result are inconclusive

• Assuming the same regression in previous question with Durbin Watson. Stat of 1.75 . H_{0 :} P≤0, H_A : P≥0 What do the values of D_L and D_u imply for the calculate Durbin Waston 1.75 for 5 percent level of significance

Positive serial correlation.