Categorical variables are included in regression analysis by ________.
A)removing the error term from the equation
B)applying the principle of parsimony
C)using dummy variables
D)using an intercept term

Question

Quizplus · Accepted Answer

Categorical variables cannot be directly included in a regression analysis because they are not continuous. Therefore, dummy variables are used to represent the categories. The dummy variables take on the value of 1 if the observation falls into that category and 0 otherwise. This allows for the categorical variable to be included in the regression analysis.

Categorical Variables Are Included in Regression Analysis by ________