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Homework answers / question archive / Part B Assignment 5 - Part B Complete the following long-answer questions and submit them to the UM Learn Dropbox

Complete the following long-answer questions and submit them to the UM Learn Dropbox .

Let's investigate the relationship between age (AGE) and income (INCOME) for a random sample of people between the ages of 25 and 65 who have a bachelor's degree but no higher degree. (NOTE: Age is recorded at the end of his last birthday.)

- Give some reasons why older people in this population might earn more than younger people. Give some reasons that younger people might earn more than older people.
- Import Assignment1.gtd into gretl and create scatterplot INCOME (y-axis) versus AGE (x-axis). Include a copy of the scatterplot with a properly labelled x- and y-axis label. Describe the pattern in two or three sentences.
- Use gretl to regress INCOME by AGE. Include a copy of the regression output and provide a one or two-sentence interpretation for the slope of the population regression line.
- Report the 95% confidence interval for the slope of the population regression line. Describe what this interval tells you in terms of change in INCOME for every one year increase in AGE.
- Use the regression line to predict the income for a 25-year-old and a 50-year-old.
- Your 75-year-old grandfather has a bachelor's degree. Should the population regression line be used to predict his income?
- Examine the Normality of the residuals using a histogram and a plot of the residuals versus each AGE. Include a copy of the histogram and the plot with properly labelled x- and y-axis labels. Summarize your conclusions in two or three sentences.
- ECON 3040 extends the 'Inference for Regression' to include multiple explanatory variables. List two explanatory variables other than AGE that impact INCOME.
- Save Part B as a pdf document and upload to the UM Learn Dropbox
*Assignment 5 - Part B*.

**Source**: Based on textbook Exercises that incorporate the dataset INAGE.