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Econometrics Models And Methods Question Paper
Econometrics Models And Methods
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2009
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KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2008/2009
INSTITUTE OF OPEN LEARNING (IOL)
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
BMS 404: ECONOMETRIC MODELS AND METHODS
DATE: WEDNESDAY 12TH AUGUST, 2009 TIME: 2.00P.M – 4.00P.M
INSTRUCTIONS
Answer question ONE and any other TWO Questions.
1. The manager of a supermarket would like to determine the relation between the
quantity demanded Y and two independent variables X1and X2where X1 represent
the price of Y and X2 represent the income of customers. Ten customers were
selected at random and the values of the variables are presented in the following
table.
a) Estimate the parameters of demand function. [ 10 marks]
b) Evaluate the results on the basis of “priori” criteria and calculate the
coefficient of multiple determination. [ 5 marks]
c) Is the overall coefficient significant at 5% level? [ 5 marks]
d) Explain the limitations of Econometric models [ 10 marks]
Quantity demanded Y Price X1 Income X2
20 4 8
8 8 6
20 6 7
18 12 7
8 16 4
7 16 3
8 12 2
16 8 8
10 6 9
24 4 10
2. The table below gives data on per capital consumption expenditure (Y) and per
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capital disposal income (X) for Kenya for 1999 to 2008 data are in Kshs.
Year Y X
1999 8,904 9,829
2000 8,783 9,722
2001 8,794 9,769
2002 8,818 9,725
2003 9,139 9,930
2004 9,489 10,419
2005 9,840 10,625
2006 10,123 10,905
2007 10,303 10,970
2008 10,546 11,337
a) Model the above problem as a regression model and estimate oß 1ß and
interpret. [15 marks]
b) Plot the data given in the table above in a scatter gram and interpret.
[5 marks]
3. To reduce the dependence on imported second hand vehicle, the government is
thinking of increasing the duty, exercise duty and value added tax on all imported
second hand vehicles. Suppose you have been hired as a consultant to assess the
impact of this decision, how will you go about giving your advise?
4. a) State and explain the assumptions of multiple regression models, giving
practical examples. [ 6 marks]
b) Explain the following terms as used in Econometrics.
i. Endogenous variables
ii. Exogenous variables
iii. Priori criteria.
c) Differentiate between economic and econometric model.
d) Econometric is science, which deals with reality. Discuss
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