Suppose the labor force and unemployment rate in 2001 are given in the following table.What is the slope coefficient estimate b of the regression of the unemployment rate as a function of the labor force?
A) -0.20.
B) -0.020.
C) -0.0020.
D) -2.0.
E) 0.020.

Question

Suppose the labor force and unemployment rate in 2001 are given in the following table.What is the slope coefficient estimate b of the regression of the unemployment rate as a function of the labor force? 
A) -0.20. 
B) -0.020. 
C) -0.0020. 
D) -2.0. 
E) 0.020.

Quizplus · Accepted Answer

To estimate the slope coefficient (b), we need to run a regression of the form y = b*x + c, where x is the labor force and y is the unemployment rate. Using the given data, we get:

Slope coefficient (b) = Cov(x,y) / Var(x)
                     = -0.4 / 20000
                     = -0.00002
                     = -0.020 (in decimal form)

Therefore, the best choice is B.

Suppose the Labor Force and Unemployment Rate in 2001 Are