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Imagine you have a model predicting ideology (where -1 is extremely liberal, 1 is extremely conservative and values can range anywhere between these two extremes)

Imagine you have a model predicting ideology (where -1 is extremely liberal, 1 is extremely conservative and values can range anywhere between these two extremes) with income (in thousands of dollars per year) and a dummy variable for White that equals 1 for White respondents and 0 for respondents of any other race. Assume that the following are the estimated coefficients for each variable:

Estimate
Intercept -.3
Income (in thousands of $) 0
White .1
IncomeWhite .01

[Note: These estimates are made up for teaching purposes, not based on any real data.]

  1. (a) Draw a plot with x-axis labeled Income (in thousands of $), which goes from 0 to 100 and y-axis labeled Ideology, which goes from -1 to 1. Graph the predicted relationship between income and ideology for non-Whites using a solid line.

  2. (b) Add a dashed line to your plot above showing the predicted relationship between income and ideology for Whites.

  3. (c) Briefly describe in words what the coefficient values tell you about the effects of income and how they vary by race. (Note: you can ignore statistical significance here and treat the estimates as if they were correct since the aim here is just to understand what the estimated values would imply.)

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