By Including Another Variable in the Regression, You Will

question 42

Multiple Choice

By including another variable in the regression, you will

• A)decrease the regression R² if that variable is important.
• B)eliminate the possibility of omitted variable bias from excluding that variable.
• C)look at the t-statistic of the coefficient of that variable and include the variable only if the coefficient is statistically significant at the 1% level.
• D)decrease the variance of the estimator of the coefficients of interest.

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Definitions:

Current Year

Refers to the ongoing calendar or fiscal year in which business is conducted or accounting is reported.

Stewardship

The responsibility for overseeing and protecting something considered worth caring for and preserving, often in the context of managing financial resources or the environment.

Financial Statements

Official records that outline the financial activities of a business, organization, or individual, including the balance sheet, income statement, and cash flow statement.

Measuring Cost

The process of determining the monetary amount required to obtain or produce an asset, incur a liability, or carry out a service.