When Should a Researcher Consider Transforming the Explanatory Variable in a Simple

question 14

Multiple Choice

When should a researcher consider transforming the explanatory variable in a simple linear regression model?

• A)when a data plot suggests there is a non-linear functional form
• B)to get a coefficient estimate with the sign predicted by economic theory
• C)to reduce the variation in the explanatory variable
• D)to maximize SSR

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