Let wage represent the annual salary of a worker in dollars, and let novels be a binary variable equal to one if the worker's primary free-time activity is reading novels. Consider the following linear model wage = By + Binovels + u, where u is the unobserved error. i. Under the assumption that 3; represent the causal effect of a worker's free-time activities (novels) on its annual salary (wage), what sign do you expect for 3,7 [6 pts] ii. What kinds of factors are contained in u? Are these factors likely to be correlated with the worker's free-time activities (novels)? [6 pts| iii. Using non-experimental data, is Assumption 4 satisfied in a SLRM between wage and novels? How does your answer affect the interpretation of an estimate for 3,7 What sign 3, do you expect for 3,? Explain. [6 pts] Using observations for 160 workers, the following equation is obtained: wdage = 63,213 + 5, 129novels. iv. Provide a precise economic interpretation of the intercept and the slope, and comment on their signs and magnitude. [7 pts]