Please help show steps so I can understand.

Question 3 [35 points] In politics, there is a large literature exploring whether Democrats differ from Republican politicians in ofce. To that end, scholars have been using a variety of outcome variables, among others data on spending and revenues. Consider the following model: Y;- = ,80 + ,81 x Democratg + 51- where Y}; is a measure of spending in city 1' and Democrat; is a dummy equal to one if the mayor is a Democrat and zero otherwise. a. [5 points] Can you explain interpret what l is capturing? b. [5 points] Can you explain why theoretically why ,61 should be different from zero. Do you expect it to be positive or negative. c. [5 points] Explain why estimating ,81 with OLS will generate a biased estimator. d. [10 points] Suppose you have information about the all the elections in all american cities from 1950 to today with the margin of victory of the party in ofce. Can you use this variable and restrict the dataset to the close elections, i.e., margins of victory less than 1% to estimate the regression above with OLS? e. [5 points] Will it lead to an unbiased estimator? Explain why? f. [5 points] Does it lead to a external validity problem? Explain why