Question

Question 1: The term statistic refers to

(a) A number (e.g., mean) computed from the sample of observations

(b) A collection of units of interest

(c) A number (e.g., mean) computed from the population observations

(d) Part of the population

Question 2: Consider the regression equation Ci=B0+B1Yi+ui where C is consumption and Y is disposable income. If a positive relationship exists between consumption and disposable income we would expect

(a) B0

(b) C

(c) B1

(d) u

Question 3: Consider the regression equation Ci=B0+B1Yi+ui where C is consumption and Y is disposable income. The regression equation presumes that the direction of causation is from

(a) C to u

(b) C to Y

(c) Y to C

(d) u to Y

Answer 1

Answer 1. (a) A number (e.g., mean) computed from the sample of observations

The statistic is always computed from sample observations and parameters are computed from the population.

Answer 2. (c) B1

We check for any possible relationship between dependent variable and independent variable using its slope. Here, dependent variable is C and independent variable is Y and B1 is the slope. So, if there exists any possible positive relationship between C and Y we need to check for B1

Answer 3. (c) Y to C

The direction of causation is from the Independent Variable Y to dependent variable C, since we are using Y to explain or predict C