The use of a dummy variable in regression analysis indicates
A)that a researcher does not really know what to include in the equation.
B)that a categorical variable is expected to have an impact on a dependent variable.
C)that insufficient data is available for the analysis.
D)the use of hypothetical data.

Question

Quizplus · Accepted Answer

A dummy variable in regression analysis is used to represent a categorical variable in the form of a binary variable (0 or 1). It is typically used when the categorical variable is expected to have an impact on the dependent variable. Therefore, option B is the correct answer. Options A, C, and D are incorrect because they do not accurately reflect the purpose of a dummy variable in regression analysis.

The Use of a Dummy Variable in Regression Analysis Indicates