1. Estimate the model Debt = 30 + 1lnc + 32Unemp + . Is unemployment significant...

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1. Estimate the model Debt = 30 + ß1lnc + 32Unemp + ε. Is unemployment significant at the 5% level? 2. You are told that the unemployment rate might have a quadratic influence on monthly debt payments. Provide an intuitive justification for this claim. 3. Estimate Debt = 30 + B1Inc + B2Unemp + 33Unemp2 + & to determine if Unemp and Unemp2 are jointly significant at the 5% level. Metropolitan area Debt Washington, D.C. 1285 Seattle Baltimore Boston Denver San Francisco San Diego Sacramento Los Angeles Chicago Philadelphia Minneapolis New York Atlanta Dallas 1135 1133 1133 1104 1098 1076 1045 1024 1017 1011 1011 989 986 970 Inc 103.5 81.7 82.2 89.5 75.9 93.4 75.5 73.1 68.2 75.1 78.3 84.0 78.3 71.8 68.3 Unemp 6.3 8.5 8.1 7.6 8.1 9.3 10.6 12.4 12.9 9.7 9.2 7.0 9.3 10.3 8.4 Dallas Phoenix Portland Cincinnati Houston Columbus St. Louis Miami Detroit Cleveland Tampa Pittsburgh 970 957 948 920 889 888 886 867 832 812 791 763 68.3 66.6 71.2 69.5 65.1 68.6 68.3 60.2 69.8 64.8 59.4 63.0 8.4 9.1 10.2 9.3 8.7 8.3 9.9 14.5 15.7 9.6 12.6 8.3 1. Estimate the model Debt = 30 + ß1lnc + 32Unemp + ε. Is unemployment significant at the 5% level? 2. You are told that the unemployment rate might have a quadratic influence on monthly debt payments. Provide an intuitive justification for this claim. 3. Estimate Debt = 30 + B1Inc + B2Unemp + 33Unemp2 + & to determine if Unemp and Unemp2 are jointly significant at the 5% level. Metropolitan area Debt Washington, D.C. 1285 Seattle Baltimore Boston Denver San Francisco San Diego Sacramento Los Angeles Chicago Philadelphia Minneapolis New York Atlanta Dallas 1135 1133 1133 1104 1098 1076 1045 1024 1017 1011 1011 989 986 970 Inc 103.5 81.7 82.2 89.5 75.9 93.4 75.5 73.1 68.2 75.1 78.3 84.0 78.3 71.8 68.3 Unemp 6.3 8.5 8.1 7.6 8.1 9.3 10.6 12.4 12.9 9.7 9.2 7.0 9.3 10.3 8.4 Dallas Phoenix Portland Cincinnati Houston Columbus St. Louis Miami Detroit Cleveland Tampa Pittsburgh 970 957 948 920 889 888 886 867 832 812 791 763 68.3 66.6 71.2 69.5 65.1 68.6 68.3 60.2 69.8 64.8 59.4 63.0 8.4 9.1 10.2 9.3 8.7 8.3 9.9 14.5 15.7 9.6 12.6 8.3