CEA Data Analysis & Statistical Methods 5

Question 1

Which of the following is an example of a non-parametric statistical test?

Accepted Answer

Mann-Whitney U test

Answer

The Mann-Whitney U test compares two independent groups without assuming normality, making it a non-parametric alternative to the independent-samples t-test.

Question 2

In regression analysis, the Variance Inflation Factor (VIF) is used to:

Accepted Answer

Quantify the degree of multicollinearity for each predictor

Answer

VIF for each predictor indicates how much its estimated variance is inflated due to correlation with other predictors; VIF > 10 is commonly considered problematic.

Question 3

The Law of Large Numbers (LLN) guarantees that as the number of observations increases, the sample mean:

Accepted Answer

Converges to the population mean in probability

Answer

The LLN states that the sample mean converges in probability (weak LLN) or almost surely (strong LLN) to the true population mean as n → ∞.

Question 4

A spurious regression in time-series analysis is most likely to occur when:

Accepted Answer

Both variables contain unit roots but are not cointegrated

Answer

Regressing two independent non-stationary (unit-root) series on each other typically produces high R² and significant t-statistics even though no true relationship exists.

Question 5

In Bayesian statistics, the posterior distribution is proportional to:

Accepted Answer

The prior distribution times the likelihood function

Answer

Bayes' theorem states that the posterior is proportional to the likelihood times the prior, combining new evidence with prior beliefs.

(CEA) Certified Economic Analyst Practice Test

(CEA) Certified Economic Analyst Practice Test

CEA Data Analysis & Statistical Methods 5