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Review the Concepts 101

leptokurtic (71) chi-squared distribution (87)
rth moment (71) Student t distribution (87)
joint probability distribution (72) t distribution (88)
marginal probability distribution (73) F distribution (88)
conditional distribution (73) simple random sampling (89)
conditional expectation (74) population (89)
conditional mean (74) identically distributed (90)
law of iterated expectations (75) independently and identically
conditional variance (76)
independently distributed (77) distributed (i.i.d.) (90)
independent (77) sample average (90)
covariance (77) sample mean (90)
correlation (78) sampling distribution (91)
uncorrelated (78) exact (finite-sample) distribution (93)
normal distribution (82) asymptotic distribution (93)
standard normal distribution (82) law of large numbers (94)
standardize a variable (82) convergence in probability (94)
multivariate normal distribution (84) consistency (94)
bivariate normal distribution (84) central limit theorem (96)
asymptotic normal distribution (98)

MyEconLab Can Help You Get a Better Grade

MyEconLab If your exam were tomorrow, would you be ready? For each chapter,

MyEconLab Practice Tests and Study Plan help you prepare for your exams.
You can also find similar Exercises and Review the Concepts Questions now in MyEconLab.
To see how it works, turn to the MyEconLab spread on pages 2 and 3 of this book and then go to
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For additional Empirical Exercises and Data Sets, log on to the Companion Website at
www.pearsonglobaleditions.com/Stock_Watson.

Review the Concepts

2.1. Examples of random variables used in this chapter included (a) the gender
of the next person you meet, (b) the number of times a computer crashes,
(c) the time it takes to commute to school, (d) whether the computer you
are assigned in the library is new or old, and (e) whether it is raining or not.
Explain why each can be thought of as random.

2.2. Suppose that the random variables X and Y are independent and you know
their distributions. Explain why knowing the value of X tells you nothing
about the value of Y.