The accompanying data set contains two variables, Birthdate and LoanDecision. 

a. LoanDecision contains three unordered categories. To facilitate subsequent analyses, we need to convert LoanDecision into dummy variables. How many dummy variables should be created? Create the dummy variables using “Need more information” as the reference category. 

b. Create a new variable based on LoanDecision. The new variable should have only two categories: “Approve” and “Not approve.” The “Not approve” category combines the “Reject” and “Need more information” categories. How many observations are in the “Not approve” category?