**Instructions: All questions are compulsory.**

**Each question is equal marks.**

## TASK: EC3017 Applied Econometrics Assignment

**Question 1.**

When there are omitted variables in the regression, which are determinants of the dependent variable, then

a) you cannot measure the effect of the omitted variable, but the estimator of your included variable(s) is (are) unaffected

b) this has no effect on the estimator of your included variable because the other variable is not included

c) this will always bias the OLS estimator of the included variable

d) the OLS estimator is biased if the omitted variable is correlated with the included variable

**Question 2.**

Possible solutions to the omitted variable bias, when the omitted variable is not observed, include the following with the exception of

a) panel data estimation

b) nonlinear least squares

c) use of instrumental variables regression

d) use of randomized controlled experiments

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**Question 3.**

In a regression of Y on X, we allow for different intercepts for men and women by

a)including a dummy for men: D_{m}

b)including an interaction term of a dummy for men and X: X*D_{m}

c)including both a dummy for men and women: D_{m} and D_{w}

d)doing a generalized least squares regression to allow for heteroskedasticity

**Question 4: EC3017 Applied Econometrics Assignment-City, University of London**

In a probit regression of Y on X the marginal effect of X on the probability of Y=1

a) could be increasing for some values of X, and decreasing for others

b) is either increasing or (but not and) decreasing in X over all values of X,

c) constant

d) not constant, but always positive

**Question 5.**

If measurement error is present in an independent variable, then the coefficient of this variable will be

a) downward biased

b) upward biased

c) biased towards zero

d) biased away from zero

**Question 6.**

In the model log(y)=β_{0}+β_{1}*t+e with t being time, the coefficient β_{1} is

a)the growth rate of y

b)the linear trend in y

c)the linear trend in exp(y)

d)none of the above

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