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,four dummy variables will need to be created and incorporated into the regression model.

Question

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In multiple regression, if a categorical variable has four levels, only three dummy variables are needed to avoid multicollinearity, with one level serving as the reference category.

One of the Variables That Are Being Considered for Inclusion