Question 1

Suppose you wish to determine whether exercising increases academic achievement.What would be the best approach to take?

Accepted Answer

A)  Compare the achievements of athletes with those of nonathletes. 
B)  Compare the achievements of baseball players with those of track and field athletes. 
C)  Compare treatment and control groups in a randomized trial. 
D)  Compare yourself with a friend who exercises less. 
A)  Compare the achievements of athletes with those of nonathletes. 
B)  Compare the achievements of baseball players with those of track and field athletes. 
C)  Compare treatment and control groups in a randomized trial. 
D)  Compare yourself with a friend who exercises less.

Question 2

Which of the following is a potential problem with randomized trials?

Accepted Answer

A)  The treatment and control groups tend to be very different. 
B)  Randomized trials can raise ethical concerns. 
C)  Randomized trials lead to biased estimates. 
D)  Randomized trials cannot be used to answer specific questions. 
A)  The treatment and control groups tend to be very different. 
B)  Randomized trials can raise ethical concerns. 
C)  Randomized trials lead to biased estimates. 
D)  Randomized trials cannot be used to answer specific questions.

Question 3

Which of the following statements is TRUE?

Accepted Answer

A)  Cross-sectional regression analysis cannot account for factors that vary between the treatment and control groups. 
B)  Cross-sectional regression analysis makes only qualitative,not quantitative,judgments about relationships between variables. 
C)  Since tastes and preferences cannot be easily measured,empirical researchers need not concern themselves with these. 
D)  Cross-sectional regression analysis assesses the relationship between two variables while holding other factors constant. 
A)  Cross-sectional regression analysis cannot account for factors that vary between the treatment and control groups. 
B)  Cross-sectional regression analysis makes only qualitative,not quantitative,judgments about relationships between variables. 
C)  Since tastes and preferences cannot be easily measured,empirical researchers need not concern themselves with these. 
D)  Cross-sectional regression analysis assesses the relationship between two variables while holding other factors constant.

Question 4

Suppose that to look at the effect of the TANF program on labor supply,researchers were to look at how labor supply by poor households changed over the past 20 years and then compare that change with changes in the income guarantee over time.This would be an example of:

Accepted Answer

A)  time series analysis. 
B)  cross-sectional regression analysis. 
C)  a randomized trial. 
D)  a quasi-experiment. 
A)  time series analysis. 
B)  cross-sectional regression analysis. 
C)  a randomized trial. 
D)  a quasi-experiment.

Question 5

Suppose that a state were to cut the welfare guarantee from $6,000 to $3,000 between 2012 and 2014.Furthermore,suppose that hours of work per year among single mothers rose from 900 to 1,200 hours/year.Using the time series approach,what is the effect of the reduction for the average single mother?

Accepted Answer

A)  -300 hours/year 
B)  300 hours/year 
C)  900 hours/year 
D)  1,200 hours/year 
A)  -300 hours/year 
B)  300 hours/year 
C)  900 hours/year 
D)  1,200 hours/year

Question 6

The difference-in-difference estimator is used in:

Accepted Answer

A)  time series analysis. 
B)  cross-sectional regression analysis. 
C)  structural modeling. 
D)  a quasi-experiment. 
A)  time series analysis. 
B)  cross-sectional regression analysis. 
C)  structural modeling. 
D)  a quasi-experiment.

Question 7

Which of the following are potential problems with time series analysis?

Accepted Answer

A)  Time series analysis cannot effectively establish causation. 
B)  Time series analysis trials can be very expensive. 
C)  Time series analysis can cause ethical problems. 
D)  When there is a slow-moving trend in one variable,it is very difficult to infer its causal effects on another variable. 
A)  Time series analysis cannot effectively establish causation. 
B)  Time series analysis trials can be very expensive. 
C)  Time series analysis can cause ethical problems. 
D)  When there is a slow-moving trend in one variable,it is very difficult to infer its causal effects on another variable.

Question 8

Randomized trials:

Accepted Answer

A)  cannot effectively establish causation. 
B)  can be very expensive. 
C)  avoid ethical problems. 
D)  are the least expensive way to test a hypothesis. 
A)  cannot effectively establish causation. 
B)  can be very expensive. 
C)  avoid ethical problems. 
D)  are the least expensive way to test a hypothesis.

Question 9

An empirical researcher identifies the effect of drug use on high school dropout rates by examining how the two variables changed over the 1980s and 1990s.This empirical approach can best be characterized as:

Accepted Answer

A)  time series analysis. 
B)  cross-sectional regression analysis. 
C)  structural modeling. 
D)  quasi-experiment. 
A)  time series analysis. 
B)  cross-sectional regression analysis. 
C)  structural modeling. 
D)  quasi-experiment.

Question 10

Which of the following can be defined as the use of data and statistical methodologies to measure the impact of government policy on individuals and markets?

Accepted Answer

A)  constrained utility maximization 
B)  empirical public finance 
C)  welfare economics 
D)  a balanced budget requirement 
A)  constrained utility maximization 
B)  empirical public finance 
C)  welfare economics 
D)  a balanced budget requirement

Question 11

A paper published in a medical journal found that children who said they dieted gained more weight over time than did children who said they did not diet.The authors concluded that dieting may lead to binge eating and therefore cause weight gain,a conclusion that was widely reported in the press.Can you think of any alternative explanations?

Accepted Answer

Although dieting may cause binge eating

Question 12

RS1U1P12S1S1P0is a measure of:

Accepted Answer

A)  the statistical significance of the regression. 
B)  how well the regression model fits the underlying data. 
C)  the statistical significance of a given coefficient. 
D)  how well the economic theory explains the behavior of the underlying data. 
A)  the statistical significance of the regression. 
B)  how well the regression model fits the underlying data. 
C)  the statistical significance of a given coefficient. 
D)  how well the economic theory explains the behavior of the underlying data.

Question 13

Two economic variables that move together are considered:

Accepted Answer

A)  correlated. 
B)  uncorrelated. 
C)  causal. 
D)  casual. 
A)  correlated. 
B)  uncorrelated. 
C)  causal. 
D)  casual.

Question 14

Suppose you estimate the effect of a treatment using a cross-sectional regression analysis as 10 while the true effect is 15.The difference of 5 represents which of the following?

Accepted Answer

A)  measurement error 
B)  bias 
C)  small sample error 
D)  difference-in-difference estimation 
A)  measurement error 
B)  bias 
C)  small sample error 
D)  difference-in-difference estimation

Question 15

What is the fundamental difference between correlation and causality? Why is it important to distinguish between them?

Accepted Answer

Two economic variables are correlated if

Question 16

Suppose a study found that gasoline prices are lower in markets in which certain gas stations (call them CheapGas stations)are present.What possibilities can you think of that would explain this correlation?

Accepted Answer

There are several possibilities.It could

Question 17

Two economic variables are _____ if the movement of one causes movement of the other.

Accepted Answer

A)  correlated 
B)  uncorrelated 
C)  causally related 
D)  casually related 
A)  correlated 
B)  uncorrelated 
C)  causally related 
D)  casually related

Question 18

Which of the following statements is TRUE?

Accepted Answer

A)  Control variables used in cross-sectional regression analysis typically remove all bias. 
B)  Attrition of volunteers in randomized trials is rare. 
C)  Randomized trials are typically inexpensive. 
D)  Cross-sectional means comparing many individuals at one point in time. 
A)  Control variables used in cross-sectional regression analysis typically remove all bias. 
B)  Attrition of volunteers in randomized trials is rare. 
C)  Randomized trials are typically inexpensive. 
D)  Cross-sectional means comparing many individuals at one point in time.

Question 19

If two measures,A and B,are correlated,which is definitely TRUE?

Accepted Answer

A)  A causes B. 
B)  B causes A. 
C)  There is no causation between A and B. 
D)  It is possible that there is a causal relationship between A and B. 
A)  A causes B. 
B)  B causes A. 
C)  There is no causation between A and B. 
D)  It is possible that there is a causal relationship between A and B.

Question 20

Which of the following is NOT true?

Accepted Answer

A)  Randomized trials use observational data. 
B)  Time series analysis uses observational data. 
C)  Cross-sectional regression analysis uses observational data. 
D)  Randomized trials provide an estimate of the causal impact of a particular treatment. 
A)  Randomized trials use observational data. 
B)  Time series analysis uses observational data. 
C)  Cross-sectional regression analysis uses observational data. 
D)  Randomized trials provide an estimate of the causal impact of a particular treatment.

Exam 3: Empirical Tools of Public Finance

Suppose you wish to determine whether exercising increases academic achievement.What would be the best approach to take?

Which of the following is a potential problem with randomized trials?

Which of the following statements is TRUE?

Suppose that to look at the effect of the TANF program on labor supply,researchers were to look at how labor supply by poor households changed over the past 20 years and then compare that change with changes in the income guarantee over time.This would be an example of:

Suppose that a state were to cut the welfare guarantee from $6,000 to $3,000 between 2012 and 2014.Furthermore,suppose that hours of work per year among single mothers rose from 900 to 1,200 hours/year.Using the time series approach,what is the effect of the reduction for the average single mother?

The difference-in-difference estimator is used in:

Which of the following are potential problems with time series analysis?

Randomized trials:

An empirical researcher identifies the effect of drug use on high school dropout rates by examining how the two variables changed over the 1980s and 1990s.This empirical approach can best be characterized as:

Which of the following can be defined as the use of data and statistical methodologies to measure the impact of government policy on individuals and markets?

R2is a measure of:

Two economic variables that move together are considered:

Suppose you estimate the effect of a treatment using a cross-sectional regression analysis as 10 while the true effect is 15.The difference of 5 represents which of the following?

What is the fundamental difference between correlation and causality? Why is it important to distinguish between them?

Suppose a study found that gasoline prices are lower in markets in which certain gas stations (call them CheapGas stations)are present.What possibilities can you think of that would explain this correlation?

Two economic variables are _____ if the movement of one causes movement of the other.

Which of the following statements is TRUE?

If two measures,A and B,are correlated,which is definitely TRUE?

Which of the following is NOT true?

Why Study Public Finance

Theoretical Tools of Public Finance

Budget Analysis and Deficit Financing

Externalities- Problems and Solutions

Externalities in Action- Environmental and Health Externalities

Public Goods

Cost-Benefit Analysis

Political Economy

State and Local Government Expenditures

Education

Social Insurance- the New Function of Government

Social Security

Unemployment Insurance, disability Insurance, and Workers Compensation

Health Insurance I- Health Economics and Private Health Insurance

Health Insurance Ii- Medicare, medicaid, and Health Care Reform

Income Distribution and Welfare Programs

Taxation- How It Works and What It Means

The Equity Implications of Taxation- Tax Incidence

Taxes on Labor Supply

Taxes on Savings

Taxes on Risk Taking and Wealth

Taxation of Business Income

Fundamental Tax Reform and Consumption Tax

Filters

R²is a measure of: