I a Variable Whose Possible Outcomes Are Coded as a "1

question 123

Multiple Choice

i. A variable whose possible outcomes are coded as a "1" or a "0" is called a dummy variable. ii. If the null hypothesis $\beta$ ₄ = 0 is not rejected, then the independent variable X₄ has no effect in predicting the dependent variable.
iii. A dummy variable is added to the regression equation to control for error.

• A) (i), (ii), and (iii) are all correct statements.
• B) (i) and (ii) are correct statements but not (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) (i), (ii), and (iii) are all false statements.

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Definitions:

Formal Statement

A formal statement typically refers to an official, explicitly articulated declaration of facts, intentions, or principles.

Empirical Measure

A method or metric that is based on observation or experience rather than theory or pure logic.

Causal Statement

A declaration that indicates a cause-and-effect relationship between two events or variables.

Positive Economics

A branch of economics that focuses on describing and explaining the economic world as it is, not as it should be.