In the Fixed Time Effects Regression Model, You Should Exclude

question 17

Multiple Choice

In the Fixed Time Effects regression model, you should exclude one of the binary variables for the time periods when an intercept is present in the equation

• A)because the first time period must always excluded from your data set.
• B)because there are already too many coefficients to estimate.
• C)to avoid perfect multicollinearity.
• D)to allow for some changes between time periods to take place.

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Definitions:

Variable Cost

Financial charges that are tied to the extent of production levels.

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments.

Upper Bound

The highest value that a mathematical function, statistical operation, or range of variables can reach under specific conditions.

Tax Rate

The calculation basis on which taxes are applied to individual or corporate income.