CBE CBE Business Statistics and Data Analysis 2

Question 1

Heteroskedasticity in a regression model refers to:

Accepted Answer

Non-constant variance of the error terms across observations

Answer

Heteroskedasticity occurs when the variance of regression residuals is not constant across all levels of the independent variables, violating a key OLS assumption.

Question 2

The Gini coefficient is used in business economics primarily to measure:

Accepted Answer

The degree of income or wealth inequality in a distribution

Answer

The Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality) and is the standard measure of income or wealth distribution inequality.

Question 3

In econometrics, instrumental variable (IV) estimation is used to address:

Accepted Answer

Endogeneity bias when regressors are correlated with the error term

Answer

IV estimation uses an instrument—a variable correlated with the endogenous regressor but not with the error term—to obtain consistent coefficient estimates.

Question 4

A business economist uses index numbers primarily to:

Accepted Answer

Compare values across time or groups relative to a base period

Answer

Index numbers express values as a percentage relative to a base period (typically 100), enabling comparisons of prices, outputs, or other variables over time.

Question 5

Which statistical test is most appropriate for comparing whether the means of two independent groups are significantly different?

Accepted Answer

Two-sample t-test

Answer

The two-sample (independent samples) t-test evaluates whether the population means of two separate groups differ, assuming approximate normality.

(CBE) Certified Business Economist Practice Test

(CBE) Certified Business Economist Practice Test

CBE CBE Business Statistics and Data Analysis 2