The Determining Function That Drives Share of Accepted Job Offers

question 26

Multiple Choice

The determining function that drives share of accepted job offers for a company is given by the following equation: AcceptedOffers_t = α₀ + α₁StartingSalary_t + α₂EconomicClimate_t + U_t, where the unit of observation is particular month (t) . Suppose one wanted to use the national unemployment rate (unemployment_t) as a proxy for EconomicClimate. Which of the following describes a condition required to hold for this to be an adequate proxy variable?

• A) α₂ < 0
• B) StartingSalary, EconomicClimate, and Unemployment rate to be uncorrelated with "other factors" (U_t)
• C) α₂ > 0
• D) EconomicClimate is correlated with StartingSalary

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Definitions:

Income

Income is the amount of money or its equivalent received during a period of time in exchange for labor, services, or investments.

Real Disposable Income

The income of individuals or the economy after adjusting for inflation, available for spending and saving after income taxes have been accounted for.

Net Exports

The value of a country's total exports minus its total imports; a positive value indicates a trade surplus while a negative value indicates a trade deficit.

Net Taxes

The total taxes paid by individuals or businesses after accounting for allowances, deductions, and credits.