A seasonal binary (or indicator or dummy)variable, in the case of monthly data,
A)is a binary variable that take on the value of 1 for a given month and is 0 otherwise.
B)is a variable that has values of 1 to 12 in a given year.
C)is a variable that contains 1s during a given year and is 0 otherwise.
D)does not exist, since a month is not a season.

Question

Quizplus · Accepted Answer

A seasonal binary variable for monthly data is a variable that takes on the value of 1 for a given month and is 0 otherwise. This allows for the inclusion of seasonality in regression analysis, such as examining the effects of weather or holidays on sales. B is incorrect as it relates to a monthly variable instead of a seasonal variable. C is incorrect as it suggests the variable is for a whole year instead of for a particular month. D is incorrect as seasonal variations are present in months, even though a month may not be considered a traditional season.

A Seasonal Binary (Or Indicator or Dummy)variable, in the Case