In a Multiple Regression, the Dependent Variable Is House Value

question 120

Multiple Choice

In a multiple regression, the dependent variable is house value (in '000$) and one of the independent variables is a dummy variable, which is defined as 1 if a house has a garage and 0 if not. The coefficient of the dummy variable is found to be 5.4 but the t-test reveals that it is not significant at the 0.05 level. Which of the following is true?

• A) A garage increases the house value by $5,400.
• B) A garage increases the house value by $5,400, holding all other independent variables constant.
• C) The house value remains the same with or without a garage.
• D) We need to include other dummy variables.

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Definitions:

Direction

Guidance or supervision towards a specific aim or goal; also refers to the course along which something moves.

Strength

The quality or state of being physically strong.

Negatively Correlated

A connection between two factors where as one factor rises, the other falls, and the reverse is also true.

Sets Of Scores

Groups or collections of numerical values, often used in statistics to represent data points from measurements or observations.