Random-Effects Models

question 10

Multiple Choice

Random-effects models

• A)assume that the time invariant component of the error term is not correlated with the independent variables.
• B)first difference the data.
• C)are impossible to estimate in STATA.
• D)can only be estimated if the panel data only have two time periods.

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Definitions:

Market Basket

A fixed set of goods and services whose total cost is used to track inflation and the cost of living over time through price changes.

CPI

The Consumer Price Index reflects the mean fluctuation in prices for a mix of consumer products and services, as experienced by urban buyers over time.

Inflation Rate

The increase percentage in the overall level of prices for goods and services in a country's economy over a period of time.

CPI

This index tracks the overall price changes of a mix of consumer products and services like healthcare, transportation, and food by calculating their weighted average price.