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How Does the Interpretation of the Coefficient on the Income

Question 8

Multiple Choice

How does the interpretation of the coefficient on the income to debt ratio change in the linear probability model of whether a mortgage applicant was approved for a loan or not if the outcome variable was Deniedi instead of Approvedi?


A) It won't change.
B) The coefficients will be the same, but the standard errors will change.
C) One will be a model of causality, the other will be purely about correlation.
D) One coefficient will be the change in probability of being denied, while the other will be the change in probability of being approved.

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