How Is the Time-Invariant Independent Variables and the Unmeasured Time-Invariant

question 8

Multiple Choice

How is the time-invariant independent variables and the unmeasured time-invariant variables captured in a fixed effects model?

• A) By running an ordinary least squares regression
• B) By running an ordinary least squares regression with robust standard errors
• C) By taking the mean of each variable for each unit across time, and running a regression on the collapsed dataset of means
• D) By including unit dummy variables

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Definitions:

Down Payment

An initial payment made when something is bought on credit, typically a percentage of the purchase price.

Compounded Annually

The process of calculating interest on both the initial principle and the accumulated interest of previous periods on a yearly basis.

Beginning of the Year

Refers to the start date of a calendar or fiscal year.

Pay Today

The requirement or action of making a payment at the current date, commonly used in the context of purchasing or settling debts.