CEA Data Analysis & Statistical Methods 2

Question 1

In a multiple regression model, multicollinearity refers to:

Accepted Answer

High correlation among independent variables

Answer

Multicollinearity occurs when two or more independent variables are highly correlated, making it difficult to isolate their individual effects.

Question 2

Which test is most appropriate for detecting autocorrelation in regression residuals?

Accepted Answer

Durbin-Watson test

Answer

The Durbin-Watson test specifically tests for first-order autocorrelation (serial correlation) in OLS regression residuals.

Question 3

A Type II error in hypothesis testing occurs when:

Accepted Answer

A false null hypothesis is not rejected

Answer

A Type II error (false negative) occurs when we fail to reject a null hypothesis that is actually false.

Question 4

In time-series analysis, a process is considered weakly stationary if:

Accepted Answer

Its mean and variance are time-invariant and its autocovariance depends only on lag

Answer

Weak (covariance) stationarity requires a constant mean, constant variance, and autocovariance that depends only on the lag, not on the specific time period.

Question 5

The interquartile range (IQR) is preferred over standard deviation as a measure of spread when:

Accepted Answer

The dataset contains significant outliers

Answer

The IQR (Q3 − Q1) is robust to outliers because it focuses on the middle 50% of the data, unlike standard deviation which is sensitive to extreme values.

(CEA) Certified Economic Analyst Practice Test

(CEA) Certified Economic Analyst Practice Test

CEA Data Analysis & Statistical Methods 2