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:

Overhead

The ongoing expenses of operating a business that are not directly associated with the production of goods or services.

Fixed Manufacturing Overhead

Costs that remain constant regardless of the level of production, related specifically to the manufacturing process, such as rent, utilities, and salaries of permanent staff.

Machine-Hours

A measure of machine usage, representing the total hours a machine operates during a specific period.

Volume Variance

The difference between the expected (budgeted) volume of production or sales and the actual volume, affecting costs and revenues.