Econ excel homework checking
Explaining Poverty
Some people believe there is a relationship between unemployment and poverty, more specifically, the higher the unemployment, the higher the poverty rate. You are asked to investigate this relationship: does high unemployment (independent variable) lead to high poverty rates (dependent variable)?
1. Set up an equation for the relationship between unemployment and poverty.
2. Estimate this relationship using the data “Exam 2 Data” from blackboard using the
regression function in Excel. Explain your results.
3. What does the excel output tell you about the regression (explain all the values
discussed in class)?
4. Are the coefficients significant? Explain.
5. Plot the data, using the most appropriate chart type. Be sure to label this chart and to
include it with your submission.
6. You are interested to see if there is any impact on your estimation of the Western
states. Use a dummy variable for the following states: California, Washington, Oregon, Arizona, Utah, Nevada, and Idaho. Run another regression with this dummy variable, as well as the previous independent variable. What does this regression tell you? Explain.
7. How are the values you discussed in question 3 different from the values in question 6? Explain.
8. Are the coefficients significant? Explain.
9. Is this regression, with the dummy variable, a better fit than the regression without a
dummy? Explain.