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.

Question

Quizplus · Accepted Answer

Statement (i) is correct as a variable with two possible outcomes coded as "1" or "0" is known as a dummy variable. Statement (ii) is also correct as if the null hypothesis is not rejected, it indicates that the independent variable has no significant effect on the dependent variable. However, statement (iii) is incorrect as the main purpose of adding a dummy variable is not to control error, but to capture the effect of a categorical variable in the regression equation.

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