When Using the T-Statistic in Multiple Regression to Determine If

question 34

Multiple Choice

When using the t-statistic in multiple regression to determine if a variable should be removed:

• A) R2 will increase if the variable is removed.
• B) if |t| > 1, the standard error will decrease.
• C) a large number of independent variables is convenient.
• D) if |t| < 1, the standard error will increase.

---

Definitions:

Federal Reserve

The central banking system of the United States, responsible for setting monetary policy, regulating banks, maintaining financial stability, and providing financial services to depository institutions, the U.S. government, and foreign official institutions.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Excess Supply

A situation in which the quantity of a good or service supplied is greater than the quantity demanded at the current price, leading to surplus stock.

Money Market

A section of the financial market where short-term financial assets with high liquidity are traded, such as treasury bills and commercial paper.