Given the Regression Results Unemployment Rate_it = α + 0

question 34

Multiple Choice

Given the regression results Unemployment Rate_it = α + 0.8 (0.3) × Alabama_it - 0.4 (0.2) × South Carolina_it + 0.2 (0.3) × North Carolina_it + 0.4 (0.12) MinimumWage_it - 0.1 (0.1) Year_t, where the coefficients are reported with their standard errors in parenthesis, how should we interpret the coefficient for minimum wage?

• A) An increase in minimum wage will increase the unemployment rate.
• B) An increase in minimum wage will increase the unemployment rate, holding fixed (time constant) differences across states.
• C) An increase in minimum wage will increase the unemployment rate, holding fixed the downward trend in unemployment rates occurring across all of these three states.
• D) An increase in minimum wage will increase the unemployment rate, holding fixed (time constant) differences across states, and the downward trend in unemployment rates occurring across all of these three states.

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Definitions:

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Permissible

Allowed or permitted within a set of rules, laws, or regulations.

Exculpatory Clause

A contract provision that relieves one party of liability if damages are caused during the execution of the contract.

Liability

A legal responsibility or obligation that may arise from any number of legal claims or is imposed by law.