THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 194

Multiple Choice

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
In examining the determinants of income,data were collected regarding the characteristics of 45 adults,and the regression Y = β₀ + β₁X₁ + β₂X₂ + β₃X₃ +ε was used,where Y is the annual income (in thousands of dollars) ,X₁ is the person's age,X₂ is his/her years of education,and X₃ is a dummy variable = 1 if the adult is female.
-If you get = 26.3 + 1.38x₁ + 2.98x₂ - 0.76x₃ + 0.34(x₂ ∙ x₃) when you run the regression,how would you interpret the coefficient on his/her years of education?

• A)For each additional year of education,women on average earn $420 less than men.
• B)For each additional year of education,women approximately earn $1,100 less than men.
• C)For each additional year of education,women on average earn an additional $3,320.
• D)For each additional year of education,women approximately earn $340 less than men.

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Definitions:

Interest Revenue

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Long-Term Investments

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Marketable Stocks

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Marketable Bonds

Bonds that can be easily sold in the financial markets because they are highly liquid and attractive to investors.