Section A Please answer ALL questions. For each question indicate whether you think the statement is largely true or largely false, and give reasons if you think the statement is false. 1. An economic model consists of mathematical equations that describe various relationships between economic variables. [2 marks] 2. A larger error variance makes it difficult to estimate the partial effect of any of the independent variables on the dependent variable. [2 marks] 3. If the calculated value of the t statistic is greater than the critical value, the null hypothesis, Ho is rejected in favour of the alternative hypothesis, H1. [2 marks] 4. A multiple regression model suffers from functional form misspecification when it does not properly account for the relationship between the dependent and the observed explanatory variables. [2 marks] 5. An explanatory variable is said to be exogenous if it is correlated with the error term. [2 marks]