Question 1

Which of the following is a characteristic of latent variables?

Accepted Answer

A)   The value of the latent variable is high, than the dependent variable for that observation is likely to be 0.
B)   The value of the latent variable is high, than the dependent variable for that observation is likely to be 1.
C)   It is an observed continuous variable reflecting the propensity of an individual observation of Yi to be equal to 0 or 1.
D)   They are normally distributed.

Question 2

Probit and logit coefficients are interpreted the same way as LPM coefficients.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is an appropriate way to interpret a coefficient on a continuous independent variable (X1)  from a LPM model?

Accepted Answer

A)   Calculate the difference in fitted values when the variable is at its actual value and increased by a standard deviation, holding all other variables at their actual values.
B)   Standardize each observation by dividing each observation by the standard deviation.
C)   The coefficient indicates how much a one unit increase in X1 changes the predicted probability.
D)   Use a latent variable.

Question 4

We can use OLS to estimate a LPM model.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is false?

Accepted Answer

A)   Fitted values from probit models and logit models are very similar when they are based on the same data.
B)   The coefficients in a probit and logit model are very similar when they are based on the same data.
C)   Probit models are slightly more accurate.
D)   Logit models make sense when using logged variables.

Question 6

Which of the following is a drawback of using LPM models?

Accepted Answer

A)   LPM models cannot handle dichotomous dependent variables.
B)   LPM fitted values do not always fall within the range of 0 and 1.
C)   LPM models require us to assume errors are normally distributed.
D)   LPM models are complicated to interpret.

Question 7

In a probit model, the interpretation of the estimated effect of X1 on the probability Y=1 depends on:

Accepted Answer

A)   The current level of X1
B)   The current level of the other independent variables.
C)   The current level of Y.
D)   Both a and b

Question 8

Which of the following is the equation for a likelihood ratio test?

Accepted Answer

A)   LR=(logLur - logLr) 
B)   LR=2(logLur - logLr) 
C)   LR=(logLr - logLur) 
D)   LR=2(logLr - logLur)

Question 9

Explain the logic behind the use of latent variables in order to explain observed variables.

Accepted Answer

A latent variable is something that is n...

Question 10

The cumulative distribution function

Accepted Answer

A)   Tells us how much of a normal distribution is to the right of any given point.
B)   Tell us how much of a normal distribution is to the left of any given point.
C)   Shows the probability for each possible value of the random variable.
D)   Has the same shape as a normal distribution, but wider tails.

Question 11

Write down the equation for a logit model with one independent variable.

Accepted Answer

The answer of Write down the equation for a logit...

Question 12

Write down the equation for a probit model with one independent variable.

Accepted Answer

The answer of Write down the equation for a probit...

Question 13

Which of the following is an appropriate way to interpret a coefficient on a continuous independent variable (X1)  from a probit model?

Accepted Answer

A)   Calculate the difference in fitted values when the variable is at its actual value and increased by a standard deviation, holding all other variables at their actual values.
B)   Standardize each observation by dividing each observation by the standard deviation.
C)   The coefficient indicates how much a one unit increase in X1 changes the predicted probability.
D)   Use a latent variable.

Question 14

A dichotomous dependent variable signifies that an event either happened or did not.

Accepted Answer

A) True 
 B)False  True

Question 15

List and explain the benefits and drawbacks of employing a linear probability model.

Accepted Answer

The LPM model may mischaracterize the relationship between X and Y by assuming that the effects of a variable on the probability of a 1 is constant across values of X Furthermore, the fitted values (Yhat may be greater than 1 or less than 0, which does not make sense since probabilities can only take on values between 0 and 1 A benefit of LPM is that the coefficient estimates are easy to interpret, where a 1 unit increase in X1 is associated with a B1 increase in the probability that Y is equal to 1

Question 16

Maximum Likelihood Estimation (MLE) uses t-tests, just like OLS.

Accepted Answer

A) True 
 B)False  False

Question 17

Which of the following is not a property of MLE if there is no endogeneity?

Accepted Answer

A)   Parameters are normally distributed.
B)   Parameters are consistent.
C)   Fitted values can be produced.
D)   Coefficients minimize the sum of squared residuals.

Question 18

Both OLS and probit models require that the error term be normally distributed.

Accepted Answer

A) True 
 B)False

Question 19

In order to run a hypothesis test on multiple coefficients to check if they are different from one another (equal, bigger or smaller)  in a probit model, we:

Accepted Answer

A)   Use an F Test
B)   Use a likelihood ratio test
C)   Run multiple t-tests
D)   Use a Chi-squared test

Question 20

Explain how we can interpret probit coefficients using the observed-value, discrete differences method in the case where X1 is continuous.

Accepted Answer

Calculate fitted value and the...

Exam 12: Dummy Dependent Variables

Which of the following is a characteristic of latent variables?

Correct Answer
verified

Probit and logit coefficients are interpreted the same way as LPM coefficients.

Correct Answer
verified

Which of the following is an appropriate way to interpret a coefficient on a continuous independent variable (X1) from a LPM model?

Correct Answer
verified

We can use OLS to estimate a LPM model.

Correct Answer
verified

Which of the following is false?

Correct Answer
verified

Which of the following is a drawback of using LPM models?

Correct Answer
Answered by ExamLex AI

In a probit model, the interpretation of the estimated effect of X1 on the probability Y=1 depends on:

Correct Answer
verified

Which of the following is the equation for a likelihood ratio test?

Correct Answer
verified

Explain the logic behind the use of latent variables in order to explain observed variables.

Correct Answer
verified
A latent variable is something that is n...
View Answer

The cumulative distribution function

Correct Answer
verified

Write down the equation for a logit model with one independent variable.

Correct Answer
verified

Write down the equation for a probit model with one independent variable.

Correct Answer
verified

Which of the following is an appropriate way to interpret a coefficient on a continuous independent variable (X1) from a probit model?

Correct Answer
verified

A dichotomous dependent variable signifies that an event either happened or did not.

Correct Answer
verified
True

List and explain the benefits and drawbacks of employing a linear probability model.

Maximum Likelihood Estimation (MLE) uses t-tests, just like OLS.

Correct Answer
verified
False

Which of the following is not a property of MLE if there is no endogeneity?

Correct Answer
verified

Both OLS and probit models require that the error term be normally distributed.

Correct Answer
verified

In order to run a hypothesis test on multiple coefficients to check if they are different from one another (equal, bigger or smaller) in a probit model, we:

Correct Answer
verified

Explain how we can interpret probit coefficients using the observed-value, discrete differences method in the case where X1 is continuous.

Correct Answer
verified
Calculate fitted value and the...
View Answer

Exam 12: Dummy Dependent Variables

Which of the following is a characteristic of latent variables?

Correct AnswerverifiedShow Answer

Probit and logit coefficients are interpreted the same way as LPM coefficients.

Correct AnswerverifiedShow Answer

Which of the following is an appropriate way to interpret a coefficient on a continuous independent variable (X1) from a LPM model?

Correct AnswerverifiedShow Answer

We can use OLS to estimate a LPM model.

Correct AnswerverifiedShow Answer

Which of the following is false?

Correct AnswerverifiedShow Answer

Which of the following is a drawback of using LPM models?

Correct AnswerAnswered by ExamLex AIShow Answer

In a probit model, the interpretation of the estimated effect of X1 on the probability Y=1 depends on:

Correct AnswerverifiedShow Answer

Which of the following is the equation for a likelihood ratio test?

Correct AnswerverifiedShow Answer

Explain the logic behind the use of latent variables in order to explain observed variables.

Correct AnswerverifiedA latent variable is something that is n...View AnswerShow Answer

The cumulative distribution function

Correct AnswerverifiedShow Answer

Write down the equation for a logit model with one independent variable.

Correct AnswerverifiedShow Answer

Write down the equation for a probit model with one independent variable.

Correct AnswerverifiedShow Answer

Which of the following is an appropriate way to interpret a coefficient on a continuous independent variable (X1) from a probit model?

Correct AnswerverifiedShow Answer

A dichotomous dependent variable signifies that an event either happened or did not.

Correct AnswerverifiedTrue

List and explain the benefits and drawbacks of employing a linear probability model.

Maximum Likelihood Estimation (MLE) uses t-tests, just like OLS.

Correct AnswerverifiedFalse

Which of the following is not a property of MLE if there is no endogeneity?

Correct AnswerverifiedShow Answer

Both OLS and probit models require that the error term be normally distributed.

Correct AnswerverifiedShow Answer

In order to run a hypothesis test on multiple coefficients to check if they are different from one another (equal, bigger or smaller) in a probit model, we:

Correct AnswerverifiedShow Answer

Explain how we can interpret probit coefficients using the observed-value, discrete differences method in the case where X1 is continuous.

Correct AnswerverifiedCalculate fitted value and the...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
Answered by ExamLex AI

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A latent variable is something that is n...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified
False

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Calculate fitted value and the...
View Answer