Which of the following non-linear adjustments CANNOT be accommodated using OLS?
A)including an independent variable that has been raised to a power
B)taking a logarithmic transformation of the dependent variable
C)including a binary indicator variable
D)raising parameters to a power

Question

Quizplus · Accepted Answer

OLS can accommodate non-linear transformations of independent variables (option A) and dependent variables (option B) as well as binary indicator variables (option C), but it cannot handle raising parameters to a power (option D). This is because OLS assumes a linear relationship between the dependent and independent variables and raising parameters to a power would violate this assumption. Non-linear regressions, such as polynomial or exponential regressions, would need to be used instead.

Which of the Following Non-Linear Adjustments CANNOT Be Accommodated Using