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:

Recession

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Transfer Payments

Payments made by the government to individuals, without the government receiving any goods or services in return.

Nondiscretionary Fiscal Policy

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Aggregate Demand

The whole of economic demand for goods and services at a given price level, within a certain time range.