When a Dummy Variable Is Included in a Multiple Regression

question 169

True/False

When a dummy variable is included in a multiple regression model,the interpretation of the estimated slope coefficient does not make any sense anymore.

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Definitions:

Sales Tax

A tax imposed by government authorities on the sale of goods and services, typically calculated as a percentage of the purchase price.

Regressive Tax

A tax system where the tax rate decreases as the taxable amount increases, placing a heavier burden on lower-income individuals.

OECD

An international organisation that works to build better policies for better lives, promoting policies that will improve the economic and social well-being of people around the world.

Progressive Tax System

A tax system where the tax rate increases as the taxable amount or income increases, effectively imposing a higher percentage rate on those who earn more.