A variable that takes on the values of 0 or 1 and is used to incorporate the effect of categorical independent variables in a regression model is called
A) an interaction.
B) a constant variable.
C) a dummy variable.
D) a logit variable.

Question

Quizplus · Accepted Answer

A dummy variable is a variable that takes on the values of 0 or 1 to represent the presence or absence of a categorical independent variable in a regression model. This allows us to incorporate the effect of categorical variables in a regression model that only accepts continuous numerical inputs. Therefore, option C is the correct answer.

A Variable That Takes on the Values of 0 or 1