Suppose you have a survey where one of the variables is "Sex", and all of the 300 people surveyed answered one of the following: 1) Male or 2) Female. Suppose further that you create 2 dummy variables: D1 = 1 if male, zero otherwise D2 = 1 if female, zero otherwise What would happen if you include both dummy variables in your regression in Excel? O Excel will not be able to run a regression with both variables in the regression. O Nothing. This is the correct way to do it. O Your regression will exhibit serial correlation. O Your regression will exhibit some multicollinearity, but can be remedied with "robust standard errors."

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Suppose you have a survey where one of the variables is "Sex", and all of the 300
people surveyed answered one of the following: 1) Male or 2) Female. Suppose
further that you create 2 dummy variables:
D1 = 1 if male, zero otherwise
D2 = 1 if female, zero otherwise
What would happen if you include both dummy variables in your regression in
Excel?
O Excel will not be able to run a regression with both variables in the regression.
Nothing. This is the correct way to do it.
O Your regression will exhibit serial correlation.
O Your regression will exhibit some multicollinearity, but can be remedied with "robust
standard errors."
Transcribed Image Text:Suppose you have a survey where one of the variables is "Sex", and all of the 300 people surveyed answered one of the following: 1) Male or 2) Female. Suppose further that you create 2 dummy variables: D1 = 1 if male, zero otherwise D2 = 1 if female, zero otherwise What would happen if you include both dummy variables in your regression in Excel? O Excel will not be able to run a regression with both variables in the regression. Nothing. This is the correct way to do it. O Your regression will exhibit serial correlation. O Your regression will exhibit some multicollinearity, but can be remedied with "robust standard errors."
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