In Order to Employ the LSDV Approach in a One-Way

question 3

Multiple Choice

In order to employ the LSDV approach in a one-way fixed effects model, we have to:

• A) Create a dummy variable for every unit and include it in the model.
• B) Create a dummy variable for every unit and include all but one in the model.
• C) Subtract the unit specific averages from both the dependent and independent variables.
• D) Create dummy variables for every unit and subtract the unit specific average from the dependent variable.

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