6. Why is a random error term included in an econometric model? a. Because most

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6. Why is a random error term included in an econometric model? a. Because most estimating techniques are not well suited to work with a deterministic o aoo for inaccuracies c. Because there is intrinsic uncertainty in any economic activity due to individual decision making. d. Because some people are irrational. 7. Of the following steps in conducting empirical economic research, which one should a. Estimate parameters and test hypotheses. b. Build an economic model guided by economic theory. c. Evaluate and analyze the consequences and implications of the results. d. Find appropriate data that can be used for estimation. 8. Suppose you wish to study the effect on employment of the increase in the minimum wage in Seattle, WA and you use employment in Portland, OR as a control group since there was no increase in the minimum wage there. The type of data you would be analyzing is calleddata. a. pure experimental b.quasi-experimental c. random d. survey 9. The parameters estimated using econometric methods are generally used for_or a. validation; repudiation b.testing hypotheses; predicting c. confirming; denying effects of policy d.generating data; probability distributions

Explanation / Answer

Q9, b) testing hupothesis and predicting the future values

Q8 d) survey

Q7 c) analysis is the last step

Q6 c) Error term is included because of uncertainty

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