The Random Effects Approach _____

question 13

Multiple Choice

The random effects approach _____.

• A)cannot be used if the key explanatory variable is constant over time
• B)is preferred to pooled OLS because RE is generally more efficient
• C)is suitable if the Hausman test rejects the assumption that the unobserved effect is uncorrelated with the explanatory variables
• D)is more convincing than fixed effects for policy analysis using aggregate data

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Definitions:

Scientific Method

A systematic process of inquiry involving observation, hypothesis formulation, experimentation, and conclusion to test scientific theories and gain knowledge.

Research Method

The systematic approach to collecting, analyzing, and interpreting data in order to increase understanding of a topic or issue.

Testable Hypothesis

A hypothesis that can be supported or refuted through experimentation or observation, making it possible to draw conclusions.

Hormones

Chemical messengers produced by the endocrine glands that regulate various bodily functions by traveling through the bloodstream to organs and tissues.