Question: Suppose the following describes the (true) data generating process for crime rates: crime; = Bo + B unemploymenti + B2 social program budget; + Uj

Suppose the following describes the (true) data

Suppose the following describes the (true) data generating process for crime rates: crime; = Bo + B unemploymenti + B2 social program budget; + Uj where i denotes a municipality. Due to data limitations a researcher estimates the equation crime; Bo + B unemployment; + vi Assuming that unemployment increases crime and a higher budget for social programs in the municipality i is associated with lower unemployment rates and lower crime, we would predict that O the estimate of 3 will be upward biased. O the estimate of B will be biased towards zero. O the estimate of 3 will be unbiased. O there is not enough information to determine whether the estimate of B will be biased or unbiased

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