One of the variables that are being considered for inclusion in a multiple regression model is marital status of the customer. There are four possible responses listed for this variable. Based on this, three dummy variables will need to be created and incorporated into the regression model.

Question

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In regression analysis, when dealing with categorical variables with more than two categories (like marital status with four possible responses), one less than the number of categories dummy variables are created to properly include them in the model. This means for four categories, three dummy variables are needed.

One of the Variables That Are Being Considered for Inclusion