If Dummy Variables Are Used to Represent Distinct Subsets or Regions,then

question 142

True/False

If dummy variables are used to represent distinct subsets or regions,then a linear relationship between predictor variables will result,and estimation of coefficients will be impossible.

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Definitions:

Loanable Funds

The money available for borrowing; the market where savers supply funds for loans to borrowers.

Supply

A relation between the price of a good and the quantity that producers are willing and able to sell per period, other things constant.

Demand

Refers to the quantity of a good or service that consumers are willing and able to purchase at various price levels over a given period of time.

Interest Rate

The percentage charged on borrowed money or paid on savings accounts, essentially the cost of borrowing money or the reward for saving.