Multiple Regression Analysis Quiz

The multiple regression model does not allow us to examine the effects of individual independent variables on the dependent variable.

• True

• False

When we use OLS method, both parameters and variables need to be linear, otherwise we cannot use OLS method.

• True

• False

The method of OLS can be applied to estimate the multiple regression model.

• True

• False

R-squared is the proportion of the sample variation in the dependent variable explained by the independent variables, and it serves as a goodness-of-fit measure.

• True

• False

It is important to put too much weight on the value of R-squared when evaluating econometric models.

• True

• False

Under the first four Gauss-Markov assumptions (MLR.1 through MLR.4), the OLS estimators are unbiased. This implies that including an irrelevant variable in a model has no effect on the unbiasedness of the intercept and other slope estimators. On the other hand, omitting a relevant variable causes OLS to be biased.

• False

• True

We use t statistics to test hypotheses about a single parameter against one- or two-sided alternatives, using one- or two-tailed tests, respectively. The most common null hypothesis is H0: bj = 0, but we sometimes want to test other values of bj under H0.

• False

• True

In classical hypothesis testing, we first choose a significance level, which, along with the df and alternative hypothesis, determines the critical value against which we compare the t statistic.

• False

• True

In a multiple regression model Y = b0 + b1*X1 + b2*X2 ​+ u, what does b2​ represent?

• A) The correlation between X1​ and X2

• B) The effect of X1​ holding X2​ constant

• C) The residual from the regression

• D) The effect of X2​ holding X1​ constant​

What is the primary purpose of multiple regression analysis?

• A) To test hypotheses about population means

• B) To analyze the relationship between two variables

• C) To predict a single dependent variable based on multiple independent variables

• D) To calculate the mean of a dataset