When You Add State Fixed Effects to a Simple Regression

question 7

Multiple Choice

When you add state fixed effects to a simple regression model for U.S.states over a certain time period,and the regression R2 increases significantly,then it is safe to assume that

• A)the included explanatory variables,other than the state fixed effects,are unimportant.
• B)state fixed effects account for a large amount of the variation in the data.
• C)the coefficients on the other included explanatory variables will not change.
• D)time fixed effects are unimportant.

Identify and interpret significant variables in a regression model.

Comprehend the concept of interaction terms in regression analysis and their significance.

Grasp how statistical significance levels (e.g., 1%, 5%) influence the retention or rejection of variables in a model.

Understand the use and interpretation of the coefficient of determination (R-Squared) in regression models.

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