Question

1.13 Consider a multiple regression model 1.15 Consider a multiple regression model: with a dummy variable: h(wage)-A, + β.educ + β white + β,NonWhite + u where wage and educ denote the annual income and the number of years of education, respectively. White indicates the dummy variable taking 1 if white and zero otherwisc. Non White indicates the dummy variable taking 1 if non-white (African, Hispanic, Asian, Pacific Islander, Native American, etc.) and zero otherwise. Which of the following is the correct? (a) We have no issue in estimating this m(wage)-A, + β,educ + β,White + Aeduex White + u where educx White denotes the interaction term between educ and the white dummy. A researcher found that β,-0.05. This implies that an increase in annual income when there is a increase in schooling is higher for white people than other races by ) 196 (b) 1% (c)1 year (d)1 year (e) 1year ; 0.05% ;5% ; 0.05% ; 5% ;50% (b) We can estimate this regression but there (c) We can estimate this regression but there (d) We can estimate this regression but regression. will be omitted variable bias will be heteroskedasticity White+Non White is imperfectly 1.16. Consider a multiple regression model: h(wage-A, + ßeduc+ β.age+ Bage + u A researcher found the following result: P, >(0 and β} <0. This implies that an increase in age _annua multicolinear with the constant term β0 (e) We cannot estimate this regression because 1 income and a further increase in age White-+ Non White is perfectly multicolinear with the constant term β0 annual income more. (a) raises; raises (b) raises; reduces (c) reduces; raises (d) reduces; reduces Consider a multiple regression model: In(wage) - Po + Beduc + B.White +u where wage and educ denote the annual income (1,000 USS) and the number of years of education, respectively. A researcher found that 1.17 Consider a multiple regression model: m(wage)-A, + β.educ + β.age + β,educx age + u A researcher found the following result: P>0 and β.< 0 . This implies that education has a = 0.05 . This implies that average annual income of white people is higher than other races by (a) S50 (b) S500 (c) 0.05%. (d) 5%. (c) 50%. impact on annual income and the effect becomes as get older (a) positive; larger (b) positive; smaller (c) negative; larger (d) negative; smaller

Answer 1

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