VIVA Short notes

1. Probability Distribution: A function that shows the probability of all possible values of
a random variable.
2. Conditional Probability: The probability of an event occurring given that another event
has already occurred. Formula: P(A|B) = P(A∩B)/P(B).
3. Normal Distribution: A symmetric, bell-shaped probability distribution where mean =
median = mode.
4. Common Probability Distributions: Frequently used distributions such as Bernoulli,
Binomial, Poisson, Uniform, Normal, and Exponential.
5. Marginal Probability Distribution: The probability distribution of one variable without
considering the values of other variables.
6. Central Tendency: A measure that represents the center of a dataset. Examples: Mean,
Median, Mode.
7. Measure of Dispersion: Indicates how spread out data are. Examples: Range, Variance,
Standard Deviation, IQR.
8. Central Limit Theorem (CLT): States that for a sufficiently large sample, the sampling
distribution of the sample mean is approximately normal regardless of the population
distribution.
9. Jarque-Bera Test: A statistical test used to determine whether data are normally
distributed based on skewness and kurtosis.
10. Independent Variable: The explanatory variable that influences or predicts the
dependent variable.
11. Dependent Variable: The outcome or response variable that depends on the independent
variable.
12. Explanatory Variable: Another name for the independent variable used to explain
changes in the dependent variable.
13. Marginal (Incremental) Contribution: The additional effect on the dependent variable
caused by a one-unit increase in an independent variable.
14. Linear Model: A model where parameters enter linearly.
15. Linear Function: A function of the form Y = a + bx.
16. Non-linear Model: A model where variables or parameters enter non-linearly.
17. Linear Trend Model: A model that explains changes in a variable over time using a
straight-line trend.
18. Log-Linear Model: A regression model where the dependent variable is in logarithmic
form, e.g., ln(Y) = β₀ + β₁X + u.
19. Interquartile Range (IQR): The difference between the third quartile (Q3) and the first
quartile (Q1). IQR = Q3 − Q1.
20. Econometrics: The application of statistical and mathematical methods to economic data
for estimating relationships and testing economic theories.
21. Variance: The average squared deviation from the mean; measures variability.
22. Covariance: Measures how two variables move together. Positive covariance means they
move in the same direction.
23. Sampling: The process of selecting a subset (sample) from a population for analysis.
24. Correlation: Measures the strength and direction of the linear relationship between two
variables. Range: −1 to +1.
25. Regression Coefficient: The estimated effect of an independent variable on the
dependent variable.
26. Regression Model: A mathematical equation showing the relationship between
dependent and independent variables.
27. Regression Analysis: The statistical technique used to estimate that relationship between
dependent and independent variables
28. Hypothesis Testing: A statistical procedure used to decide whether to reject or fail to
reject a hypothesis.
29. Stochastic Relationship: A relationship containing randomness; outcomes are not
perfectly predictable.
30. Random Variable: A variable whose value is determined by chance.
31. Deterministic Relationship: A relationship with no randomness; the dependent variable
is completely determined by the independent variable.
32. Population Regression Line: The true regression line describing the relationship
between variables in the entire population.
33. Conditional Mean: The expected value of the dependent variable given a specific value
of the independent variable.
34. Conditional Distribution: The probability distribution of one variable given the value of
another variable.
35. Sample Regression Function (SRF): The estimated regression equation obtained from
sample data.
36. OLS (Ordinary Least Squares) Method: A technique that estimates regression
coefficients by minimizing the sum of squared residuals.
37. Partial Regression Coefficient: Measures the effect of one independent variable on the
dependent variable while holding other variables constant.
38. Partial Derivatives: Measures the rate of change of a function with respect to one
variable while keeping other variables constant.
39. Stochastic Error (Error Term): The random component in a regression model
representing omitted factors and random influences.
40. Residual: The difference between the actual value and the predicted value of the
dependent variable.
41. Panel Data: Data that combines cross-sectional and time-series observations over
multiple time periods.
42. Time Series Data: Data collected on the same variable over time.
43. Cross-Sectional Data: Data collected from many individuals or units at a single point in
time.
44. Pooled Cross-Sectional Data: Data from different cross-sections combined across
different time periods.
45. Empirical Analysis: Analysis based on observed data using statistical methods.
46. Joint Probability Distribution: The probability distribution of two or more random
variables considered together.
47. Standard Deviation: The square root of variance; measures the spread of data.
48. Standard Error (SE): The standard deviation of a sampling distribution; measures the
precision of an estimate.
49. T-test: Tests the significance of an individual coefficient or compares two means.
50. F-test: Tests the overall significance of a regression model or compares multiple means.
51. MWD Test (Modified Wald Test): Used to detect heteroscedasticity in regression
models.
52. P-value: The probability of obtaining the observed result if the null hypothesis is true.
53. Degree of Freedom (df): The number of independent pieces of information available for
estimation.
54. Null Hypothesis (H₀): The hypothesis stating that there is no effect or no relationship.
55. Alternative Hypothesis (H₁): The hypothesis stating that an effect or relationship exists.
56. Critical Region: The set of values of the test statistic that leads to rejection of the null
hypothesis.
57. Level of Significance (α): The maximum probability of making a Type I error. Common
values are 0.05 and 0.01.
58. Confidence Interval: A range of values likely to contain the true population parameter
with a specified confidence level (e.g., 95%).
59. TSS (Total Sum of Squares): Total variation in the dependent variable.
60. ESS (Explained Sum of Squares): Variation explained by the regression model.
61. RSS (Residual Sum of Squares): Variation not explained by the model. Relation: TSS
= ESS + RSS.
62. Population Parameter: A numerical characteristic of an entire population (e.g., μ, σ).
63. Descriptive Statistics: Statistical methods used to summarize and describe data (mean,
median, SD, etc.).
64. CLRM (Classical Linear Regression Model): The standard linear regression model
based on assumptions such as linearity, no perfect multicollinearity, homoscedasticity, no
autocorrelation, and normality.
65. Significance t-ratio: The calculated t-statistic used to determine whether a regression
coefficient is statistically significant.
66. Multicollinearity: A situation where independent variables are highly correlated with
each other.
67. Remedial Measures (for Multicollinearity): Remove highly correlated variables,
combine variables, collect more data, or use Ridge Regression/Principal Component
Analysis.
68. LIV (Linear Independent Variable): Refers to an explanatory (independent) variable
used in a linear regression model.
69. Dummy Variable: A binary variable coded as 0 or 1 to represent qualitative
characteristics. Example: Gender:(Male = 1, Female = 0)(Urban = 1, Rural = 0)
70. ANOVA Model (Analysis of Variance): A statistical method used to compare the
means of three or more groups.
71. Qualitative Variable: A categorical variable (e.g., gender, religion).
72. Quantitative Variable: A numerical variable (e.g., income, age).
73. ANCOVA Model (Analysis of Covariance): Combines ANOVA and regression by
comparing group means while controlling for continuous variables.
74. LPM (Linear Probability Model): A regression model used when the dependent
variable is binary (0 or 1).
75. CLRM (Classical Linear Regression Model): Same as Question 56.
76. Specification Bias: Bias resulting from an incorrectly specified regression model, such
as omitted variables or wrong functional form.
77. Standard Deviation: The square root of variance; measures data dispersion.
78. Principle of Parsimony: Among competing models, the simplest model that adequately
explains the data is preferred.
79. RESET (Regression Equation Specification Error Test): A test used to detect omitted
variables or incorrect functional form in a regression model.
80. Poisson Distribution: A discrete probability distribution that shows the probability of
a given number of events occurring in a fixed interval of time or space.
81. Binomial Distribution: A probability distribution for the number of successes in a fixed
number of independent trials.

• P(A|B) = P(A∩B)/P(B)
• Variance = Σ(X − X ̄ )² / (n − 1)
• Standard Deviation = √Variance
• Cov(X,Y) = Σ[(Xi−X̄ )(Yi−Ȳ)]/(n−1)
• Correlation (r) = Cov(X,Y)/(σXσY)
• Regression: Y = β₀ + β₁X + u
• TSS = ESS + RSS
• t = (Estimate − Hypothesized Value)/SE
• F = MSR/MSE
• IQR = Q3 − Q1