Consider the Regression Example from Your Textbook, Which Estimates the Effect

question 27

Multiple Choice

Consider the regression example from your textbook, which estimates the effect of beer taxes on fatality rates across the 48 contiguous U.S.states.If beer taxes were set
Nationally by the federal government rather than by the states, then

• A)it would not make sense to use state fixed effect.
• B)you can test state fixed effects using homoskedastic-only standard errors.
• C)the OLS estimator will be biased.
• D)you should not use time fixed effects since beer taxes are the same at a point in time across states.

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Definitions:

Interdependence

A relationship dynamic where entities rely on each other to a significant extent, affecting each other's conditions or actions.

Significant Influences

Major factors or individuals that have a profound impact on one's thoughts, behaviors, or life direction.

Long Periods

Extensive intervals of time that may be significant in understanding behavior patterns, development, or effects.

Positive Illusions

Slightly unrealistic or overly optimistic beliefs about oneself, others, or the world that can have protective mental health benefits.