Suppose the U

question 24

Multiple Choice

Suppose the U.S. Federal Reserve raised its interest rate by 1 percentage point between 2014 and 2015, but the Bank of Canada made no change in its interest rate. You estimate the following model in an attempt to assess the effect of the change in interest rate on the unemployment rate: Unemployment_it = β₀ + β₁U.S._it + β₂Y2015_it + β₃U.S._it × Y2015_it + U_it
Here, U.S._it is a dummy variable equaling one if the observation is in the U.S. and Y2015_it is a dummy variable equaling one if the observation is in 2015. Which of the following variables may generate an endogeneity problem when attempting to use the estimate for the diff-in-diff (β₃) as the effect of the interest rate change?

• A) Changes in the U.S. fiscal policy between 2014 and 2015
• B) Changes in overall level of trade in North American between 2014 and 2015
• C) The difference in average labor force participation between U.S. and Canada
• D) Changes in international immigration laws between 2014 and 2015

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Definitions:

Yielding Conflict

A conflict resolution strategy where one party gives in to the demands or viewpoints of another to resolve the disagreement.

Equal Power

A condition or state where all participants or groups have the same amount of control, influence, or authority.

Collectivist Cultures

Collectivist cultures prioritize the goals and needs of the group over the desires and aspirations of the individual, emphasizing community, harmony, and interconnectedness.

Forcing Style

A conflict resolution approach where one party imposes its will on another, disregarding the concerns and interests of the other party.