Question

QUESTION 33

True or False: When conducting analysis using categorical
variables, we include a dummy variable for every category covered
by the categorical variable.

True

False

QUESTION 34

We are analyzing the effects of regime type on corruption rates
with the following model: Corruption = 10 - 0.1 GDP (per capita) -
2.0Democracy where Corruption is an index of corruption, GDP (per
capita) is measured in thousands of dollars, and Democracy is a
dummy variable that is equal to one if a country is a democracy and
0 otherwise. What is the expected rate of corruption of a
democratic country with a per capita GDP of $50,000?

A. 8.5

B. Not enough information to come up with
an answer

C. 13.0

D. - 4992

Answer #1

(33) We include only one variable in a regression line for a categorical variable with two categories. Therfore, we creates K-1 dummy variable for a categorical variable with K categories.

For example, gender has two category male and female so we will create one dummy variable for that.

Answer: FALSE.

(34) Corruption = 10 - 0.1 GDP (per capita) - 2.0Democracy

Where , GDP (per capita) is meaured in thousand of dollars

Democracy is a dummy variablle. It takes two values.

Democracy = 1 , If country is a democracy.

Democracy = 0, otherwise

expected rate of corruption of a democratic country with a per capita GDP of $50,000:

Put GDP (per capita) = 50 and Democacy = 1

=> Corrumption = 10 - 0.1(50) - 2 (1)

=> Corrunption = 10 - 5 - 2

=> Corruption = 3

Note: The closet look a like answer is 13. Whereas the correct answer is 3. So, it is better to mark option (C)

Answer: Option (C)

QUESTION 30
True or False: We can include a categorical variable (such as
region) in a multivariate model in the same way we include a
continuous variable.
True
False
2.5 points
QUESTION 31
True or False: We fail to reject the null hypothesis if the test
statistic is greater than the critical value.
True
False
2.5 points
QUESTION 32
True or False: We necessarily do not have an omitted variable bias
problem the omitted variable is uncorrelated with...

QUESTION 24
True or False: Measurement error in the dependent variable causes
our beta-hat estimates to be biased.
True
False
2.5 points
QUESTION 25
True or False: Perfect multicollinearity means all independent
variables are uncorrelated with each other.
True
False
2.5 points
QUESTION 26
True or False: Statistical tools allow us to prove the null
hypothesis is wrong.
True
False
2.5 points
QUESTION 27
True or False: The coefficient on the interaction of a dummy
variable and...

QUESTION 19
True or False: Adding more independent variables into the model
necessarily reduces bias.
True
False
2.5 points
QUESTION 20
True or False: By adding more independent variables into our OLS
model, we have a greater chance of getting rid of the endogeneity
that exists within the error term.
True
False
2.5 points
QUESTION 21
True or False: Given the model Income = β 0 + β 1 Parental income +
β 2 Male where Male is...

Answer True or False:
1. Classification criteria for economic system include
decision-making systems, mechanisms for information and
coordination, incentive structures, property rights, and mechanisms
for public choices.
2. All economic systems can be classified as market capitalism
or centrally planned socialism.
3. Generally speaking, transition economies emerging from the
former Soviet Union have done least well with transition, while
those of Central and Eastern Europe have done the best.
4. Capitalism relies primarily on material incentives, while
planned socialism and...

All of these are True or False question, please find
full correct and precise answers with Gregory and Stuart, Comparing
Economic System in the Twenty-First Century, 7th edition.
1.Classification criteria for economic systems include
decision-making systems, mechanism for information and
coordination, incentive structures, property tights and mechanism
for public choices.
2.All economic systems can be classified as market
capitalism or centrally planned socialism.
3.Generally speaking, transition economies emerging
from the former Soviet Union have done least well with transition,
while...

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