ANSWER Q4

Question 4 In order to anses the effect of level of education on levels of credit card debt, the veriable Education was recorded as obe of two categorles, Degree (if the nocount bolder attinined a third-lovel degree) or School (If the highent level of education wis nocond-level school). Descriptive plots are provided (a) Taking Loans and Education as predictorn, a model is fitted to explain CCdebt, in the form CCdebt =0+1 Loans 4+2 Education Degree +4. glving the output: (i) For this model, write down the entimated relationship between CCdebt and Loans for: - a crodit card account holder whoee education level attained is School. - a credit card account holder whose education level nttained is Degree. [3 raarks] (ii) What assumption is being made about the relationshlp between credit card debt and loan repayments comparing the two types of education levels, School and Degroe? [2 markes] (b) An internction term, Loans : Education Degree, calculated as (Loansi )( Education Degree, ) for each account bolder, is added to the model, giving the output: (i) For this model, write down the extimated relationshlp between CCdebt and Loans for: - a credit card acoount holder whoee education level attained is School. - a credit card account holder whose education level attained is Degree. [4 marks] (ii) Interpret the fitted coefficients in this model. Referring to the output, discns which of the extimated effects are significant, ensuring you state the hypotheses being tested for any lyypothesis test you refer to. [6 marks]