Given the Regression Results Unemployment Rate_it = α + 0

question 27

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, what might be a fact that would make you concerned about the interpretation of the coefficient on minimum wage as being causal?

• A) North Carolina has consistently had a higher share of college educated in the population relative to other states in the analysis.
• B) National policies have led to stricter conditions to apply for unemployment insurance.
• C) The minimum wage rate is different across many states in the southern region of the U.S.
• D) In most instances, when a state raises the minimum wage it is also accompanied by state legislation that changes fiscal policy towards economic activity.

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Definitions:

Required Rate

The minimum return or interest rate a lender demands or an investor expects to receive from an investment.

Simple Interest

Interest calculated only on the initial amount of a loan or principal, not on the interest previously earned.

Payments

Amounts of money that are paid or due to be paid as part of a contractual agreement or obligation.

Personal Line

A personal line of credit, a type of unsecured loan that provides a borrower access to a set amount of money which they can borrow from as needed.