Explanation:
is the regression slope and represents the change in for every unit change in . The regression slope is always positive if the trend is increasing and negative if the trend is decreasing. Therefore, a positive means that as time increases, the participation rate increases.
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An FRM exam candidate studies labor participation rate for males 18 years and over, and obtains the following linear model:
Where stands for participation rate and time in years.
The fact that (the regression slope) is positive means:
A
Participation rate decreases with increase in time
B
Participation rate increases with time
C
Time is the only explanatory variable
D
As males grow older, less and less of them engage in labor
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